Minister for Consumer Affairs Jane Garrett has announced plans to reform the Estate Agents Act 1980 to combat misleading price advertising on residential properties and provide certainty for buyers.
Under the new laws, real estate agents will have to provide prospective buyers and Consumer Affairs Victoria with evidence about how they arrived at a property’s advertised price.
Agents will be required to give prospective buyers a new information statement with the details of:
- three comparable properties sold recently
- the agent's estimated selling price
- the median sale price of properties for that suburb.
New rules will aim to reduce misleading advertising practices and increase transparency:
- Phrases in the advertised price, such as ‘starting from’, ‘over’, and ‘+’, will be outlawed
- Advertised price ranges will be restricted to no more than 10 per cent
- Advertising will have to remain accurate through the sales campaign, and agents must revise the advertised price if a seller rejects an offer to buy that is above the advertised price.
Estate agents who fail to comply with the proposed underquoting laws risk fines of more than $30,000 and may also lose sales commissions and other fees. This represents an additional penalty of around $14,000 on an average home and much more on blue chip properties.
The announcement comes as enforcement work by our underquoting taskforce increases this autumn.
So far, the taskforce has examined about 1,000 property sales files and has 10 active investigations underway. Legal action has also commenced against one agency in the Federal Court, drawing on misleading and deceptive provisions under the Australian Consumer Law.
The Victorian Government intends to introduce these reforms into Parliament in the middle of the year, to commence in late 2016, and will continue to consult with the real estate industry.