Real estate agents in New South Wales could be fined $110,000 or more if caught underquoting properties under proposed laws intended to stamp out misleading price estimates and increase transparency for buyers.
The Minns government has started consultation with the property sector as it prepares to draft legislation to enact tougher underquoting laws, which it expects to introduce to parliament next year.
Labor is also looking to mandate “a price or price guide on all advertising so prospective buyers don’t waste their time on properties outside of their budget”.
Underquoting is a tactic used by some agents who advertise a property for less than the estimated selling price or the owner’s asking price in order to lure buyers and drum up competition.
It is against federal consumer law to underquote and most states, including NSW, have additional regulations to further discourage the practice.
However, the NSW minister for better regulation and fair trading, Anoulack Chanthivong, said there was broad recognition from buyers and the property industry that stronger laws were needed to restore trust and improve transparency.
“Our message is that we hear you,” he said. “We’ve developed a package of reforms and are now consulting with the sector to ensure we get the balance right between consumer protection and practical implementation for industry.
“The proposed laws will ensure NSW Fair Trading’s strata and property taskforce can take meaningful action against misleading conduct in property advertising and transactions and clean up the NSW market.”
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The taskforce, which was set up earlier this year, has already uncovered instances of alleged underquoting, including the high-profile case involving Sydney agent Joshua Tesolin.
In August, NSW Fair Trading announced it had suspended Tesolin’s real estate agent’s licence pending possible disciplinary action for engaging in alleged “serious and repeated” breaches of the law.
This included allegedly underquoting the selling price of more than 100 residential properties, Fair Trading said.
The government is proposing to increase fines for real estate agents caught underquoting from $22,000 to $110,000, or three times the agent’s commission, whichever is greater. It is also proposing to mandate prices on listings.
Agents would also be required to publish a “statement of information” intended to help prospective buyers understand how the selling price was calculated, including comparable sales and suburb median prices.
NSW Fair Trading, the state’s consumer regulator, would be able to take greater disciplinary action against agents, including by publishing details of underquoting breaches.
A standalone offence would be created for agents who failed to meet continuing professional development requirements for agents.
The NSW government said it planned to model the legislation on laws Victoria passed in 2016, which it said were now “widely accepted” by the real estate industry.
Earlier this month, the Victorian government announced it had further strengthened its own underquoting restrictions to ensure agents used the most appropriate comparable local properties when determining a home’s likely price before auction.
In NSW, the details of the government’s underquoting reforms will be determined by consultation with the property and real estate industries and any amendments passed by the opposition or crossbench.
