Government should regulate property investment industry

Government should regulate property investment industry
Government should regulate property investment industry

This may shock you, but, at the time of writing there still exists no regulation in the property investment industry. Technically, this means that anyone, regardless of their experience and qualifications, can give you advice on how to spend a considerable amount of money to buy an investment property, even making commissions from the sale and charging you for their advice, and not a single piece of legislation exists to offer you the tiniest amount of protection if it all goes wrong. 

The government should be thoroughly ashamed of itself. The time and effort I have placed into trying to bring about such regulation, with the help of my fellow board members of the Property Investment Professionals of Australia (PIPA), have led me to believe that the government, and ASIC to a lesser degree, is more concerned with containing costs than they are with your financial security. 

I have had meetings with Treasury and individual senators, provided comment to newspaper articles and I have developed comprehensive submissions which practically hand the legislation to the government on a silver platter, and for five years I have been completely stone-walled. 

Do I sound mad to you? You bet I am! If you have $20,000 cash to invest, your financial planner will be regulated to the wall in regards to how they can advise you on its investment. But, mention you are looking to buy $500,000 worth of property and every shonky man and his dog will come out of the woodwork to help you part with it, and you will be left stranded when it falls in a heap. 

Recently, new regulation around mortgage brokers was introduced, and in response to a query by a journalist I know, made to the office of the then Treasurer (addressed to Bill Shorten the then Assistant Treasurer and Minister for Financial Services and Superannuation) about the absence of property investment adviser laws, a statement was issued by his office saying: 

“The government is currently implementing numerous reforms, including the national regulation of consumer credit and the Competitive and Sustainable Banking System Package. These reforms will regulate property spruiking intermediaries who are involved in arranging credit for consumers.” 

I had to be held back from flying to Melbourne and shaking the Treasurer till he finally saw some sense! The ridiculous suggestion that the only problem in this industry comes from spruikers was only upstaged by the claim that regulating the people who write the finance for their dodgy deals was going to in any way make a difference. 

The fact remains – as a property investor, you currently have no right to be protected in your dealings; if you receive bad advice which you act upon, you have no recourse. Further, your advisers are unlikely to even have Professional Indemnity Insurance, as the underwriters will not insure unregulated professionals. 

PIPA (www.pipa.asn.au) is a not-for-profit association which is working hard to change this situation, and I promise you I do not intend to stop lobbying until we have a suitable outcome. In my opinion, the only suitable outcome is regulation and I will fight for that until I am very old if necessary. Meanwhile, PIPA has created standards and accreditation to ensure that someone is watching the shop. Our members are required to uphold a strict code of conduct and to also work toward becoming a Qualified Property Investment Adviser (QPIA®) by completing a course. This course was developed initially by Deakin Prime University and I have since undertaken significant upgrades to it. 

You can help in two ways. Firstly you can email Wayne Swan, asking the simple question: “Why is there no regulation for the property investment industry and when will it be introduced?” I figure that if everyone who reads this book does this, he’ll get tens of thousands of emails and something will have to be done. Be sure that you tell him to contact PIPA, because we can help him to fast-track this issue. His email address is [email protected]

Secondly, you can bring pressure to bear on the industry by refusing to deal with any property professional who is not a member of PIPA. Oh, when asked they are likely to give you a range of plausible reasons why they aren’t, but the facts are membership to the association is not expensive, and we are not for profit. 

Last of all, deal only with Qualified Property Investment Advisers (QPIA®), who have completed the PIPA course. No other course matches its high standards and at least bydealing with such people you can be sure of a high standard of service delivery and knowledge.

Margaret Lomas is a best-selling author and writes and hosts the popular Property Success With Margaret Lomas and heads up the panel on Your Money, Your Call, both on Sky News. This article is an excerpt from her latest book, Investing In the Right Property Now. For more information about the book, click here.

Margaret Lomas

Margaret Lomas

Margaret Lomas is a best-selling author and writes and hosts the popular Property Success With Margaret Lomas and Your Money, Your Call, both on Sky News. She is the founder of Destiny.

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