The Victorian government has announced a dedicated taskforce to crack down on underquoting in the real estate industry, but buyers advocates say tougher penalties are needed to stamp out the practice.
The $3.8m taskforce will investigate allegations of deceptive property prices across the state, building on Consumer Affairs Victoria’s (CAV) auction monitoring, inspections and investigations.
The minister for consumer affairs, gaming and liquor regulation, Melissa Horne, said resources would be focused on monitoring sales campaigns, collecting market intelligence including public complaints and conducting targeted inspections to ensure compliance with underquoting laws.
Guardian Australia last month revealed underquoting was rife within the industry in Victoria, where up to 80% of properties were estimated to be underquoted.
In May 2021, inspectors made unannounced visits to 29 metropolitan and regional estate agents’ offices to monitor their compliance with underquoting laws.
From 1 July 2021 to 31 July 2022, CAV recorded 1,466 underquoting inquiries and complaints. During the same period, just 48 infringements and 171 official warnings were laid.
Horne said underquoting was identified as a “key concern” by the recent review into Victoria’s property market.
She said a dedicated taskforce would send a “strong message” to real estate agents. Embedded in CAV, the taskforce will encompass inspectors, investigators, information analysts and legal officers.
“We’re cracking down on underquoting … because it is not only unfair and wastes house-hunters’ time and money at a time when every dollar courts – it’s also illegal,” she said. “A dedicated taskforce … will ensure those doing the wrong thing are held to account.”
Buyers advocate David Morrell said the taskforce was a “Band-Aid” over an issue that needed to be addressed with meaningful regulatory change.
“The problem is even if they put more resources in, they haven’t got availability to nail them,” he said. “Look at their success rate, everybody gets underquoted yet we’ve got 29 investigations.
“It’s absolutely appalling.”
Morrell said CAV needed to place harsher fines on agents and investigate vendors complacency in reported cases in order to dissuade perpetrators.
“They need to make it painful if you are caught,” he said. “The vendor is complicit in a lot of the cases. We all make complaints and it’s water off a duck’s back, a slap over the hand.
“Take their licences off them, there’ll be a fight for quality and then people will have confidence in the industry.”
In May last year New South Wales established a dedicated underquoting team to address “rising concerns” about the practice.
In 2020, 55 penalty notices were issued in NSW for underquoting – including 25 issued after the underquoting team was established – from 200 complaints.
Since then, there have been 161 penalty infringement notices issued for underquoting and related offences. Each case was fined $2,200.
Buyers agent Paul Mulligan said the regulations hadn’t been effective.
“If it isn’t working in New South Wales I can’t see how it will work in Victoria,” he said.
The Real Estate Institute of Victoria (REIV) has lodged a submission to CAV advocating for transparency reforms, such as providing greater detail in the compulsory statement of information which estimates pricing for all residential properties.
“Part of what we’ve been pushing for … is to have regulation around pricing based on evidence,” the REIV chief executive, Quentin Kilian, said.
“At least then the buyer can say OK, it’s not comparative but here’s the rationale. Real estate markets are so diverse, they move differently and have different pressures. You can’t have a one size fits all.”
