Login
iscover
Following a surge of buyers’ agents, brokers and accountants promoting financial advice on social media, the Property Investors Council of Australia has called for more regulation in the property sector.
The Property Investors Council of Australia (PICA) has sounded the alarm over a growing number of agents, brokers and accountants promoting financial advice on social media, which may jeopardise the long-term sustainability of the market.
One of the behaviours PICA has warned about is the provision of “get-rich-quick” advice, saying it preys on the vulnerabilities of uneducated investors who want to build significant wealth fast.
PICA also raised concern over unsubstantiated or independently verified claims of outperforming investment returns, such as selectively quoting returns that are significantly above average.
Furthermore, another issue that has come under scrutiny is the promotion of investing as a more attractive alternative to home ownership, particularly due to the tax benefits.
Additionally, PICA criticised the promotion of buying in trusts, or SMSFs, with the intention of acquiring multiple properties quickly and circumventing APRA’s loan servicing constraints.
PICA said the behaviours breach multiple regulations under ASIC’s Regulatory Guide and reminded members of their obligations under the Australian Consumer Law on unconscionable conduct and misleading advertising.
Ben Kingsley, PICA’s chair, said that promotions of questionable claims about rapid investment returns and other concerning behaviours undermine consumer protection and market stability.
“This growing number of operators are marketing quick profits through residential property, using tactics that overstretch current credit lending rules or outright breaches of the law,” he said.
“Particularly when it comes to investment advice around recommending trust entities or setting up an SMSF without proper licensing.”
After collecting feedback and evidence of illegal activities, PICA wrote to several key industry bodies and real estate institutes last week, deeming the behaviours “risky and self-interest actions”.
“The results of this are increasing short-term market speculation, which in turn damages the reputation of the industry, including those doing the right thing and puts in jeopardy the long-term sustainability of the residential property market for all Australians,” it said.
PICA urged agencies to avoid such marketing activities and adopt a more balanced approach to avoid regulatory scrutiny.
It also warned about the potential impact of the rising level of uncontrolled promotion, including direct financial risks to investors and to the broader housing market.
“We risk turning residential property from a long-term passive wealth vehicle, that provides important rental accommodation supply across Australia, into a short-term speculative trading asset,” Kingsley said.
Additionally, PICA said that if the government were to step in and impose significant regulations and reforms, there would be a risk of overregulation, which could negatively impact all businesses in the trade.
“If we keep going down this path whereby property investors become the dominant players in the market in the short-term, and we see prices spikes locking out everyday Australians from buying a home, who do you think the politicians and regulators are going to support?”, Kingsley concluded.
You may like: [How one refugee made a multimillion-dollar property portfolio]
You are not authorised to post comments.
Comments will undergo moderation before they get published.