Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 is set to prohibit property investment firms’ practise of sharing undisclosed kickbacks among the supply chain involved during sale of properties. This change will take effect on July 1 of this year as handed down by regulators from New South Wales.
Property commentator and valuer Anna Porter of Suburbanite agrees with the new law, especially given the way these current transactions happen.
"Property investment firms commonly pass some of their commission on to the mortgage broker, accountant or financial planner as a reward to them for passing on the referral.” She said. “This means that many brokers or financial service providers are making significant amounts of money just to refer on to a property firm, often totalling hundreds of thousands of dollars a year.”
Because of this, brokers would be in a position where they stand to profit from both halves of the process. "They are being paid on both sides of the fence,” Porter said. “Until now this has been a grey area and there was nothing stopping this practise."
Once the new law comes into effect, a broker can only take a referral fee from the property firm provided that he or she is a licensed real estate agent and – at the same time – holds a Corporation’s license under the Australian Capital Territory.
“Subsequently, every transaction that they receive a referral fee from they will be putting their license up against the transaction and taking full liability for the conduct, practises and outcome of that transaction, ever if they have little to do with the transaction, they are a party to it financially and therefore take as much risk as everyone else in the transaction,” Porter explained.
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