Should property advice be regulated?

Should property advice be regulated?
Should property advice be regulated?

Property advice is currently not regulated and anyone can give property advice, regardless of their experience and qualifications. There have been calls to introduce a national regulatory framework for some time; with some saying it is in far closer reach under the current government.

Property Observer has asked groups and experts active in the space to share their thoughts on the matter exclusively with us.

They were each asked:

Should the property industry be regulated? If so, how should we go about it? If not, why not?

Here, we share their responses to this question.

We also invite other spokespeople, and readers, to have their say.

Frank Valentic – Managing director of Advantage Property ConsultingFrankValentic-profile


Yes I believe the property industry should be regulated because consumers need to be protected from unscrupulous operators. In Victoria, the Estate Agent’s Act states that anyone who buys, sells or leases real estate and receives a fee should be a licensed estate agent or operate for a licensed agent.

There are many examples in the property industry where property marketers or other professionals receive fees/commissions/kickbacks and don’t act in a client’s best interests and are in breach of the Estate Agent’s Act as they are not licensed estate agents. 

The property industry should go about regulating the industry by simply making anyone who receives any fees (directly or indirectly) required to have a written authority signed by the client with all fees disclosed.  These professional should operate as a licensed estate agent or agent’s representative.

This would hopefully clean up our industry and ensure that only real estate professionals with the appropriate qualifications can give consumers advice to protect consumers, just as real estate professional should not give advice in any other areas including financial, legal or building law etc.

Ben Kingsley – Chair of Property Investment Professionals of Australia (PIPA) ben-kingsley-porfile


Property is a very high value transaction. In most households it’s the biggest single investment outside of the family home. And so it simply doesn’t make sense that just anybody can offer property investment advice.

An unregulated industry, with such high value assets, offers unscrupulous operators the ability to make significant financial gains and tempts many to put their self-interest ahead of their clients’ best interests.

For example, some property developers and builders offer upwards of 10% of the value of a property as a commission incentive for referrals from financial planners, accountants and mortgage brokers etc. So if you have a $500,000 property, we’re looking at a $50,000 commission payment.

As the chair of PIPA, it’s not my position to judge if this fee is excessive or not, but in many cases, because we don’t have regulation, these types of commissions are not disclosed to the consumer. This begs the question – why?

Our insight suggests that if the majority of consumers did know about these significant commissions, they might not sign up for them, believing they don’t reflect the fair value for the advice and work performed by these people.

As a result of the lacking regulation and as part of our steps to help increase the professionalism of this industry, PIPA has developed a full disclosure policy, whereby all members pledge to disclose all fees, commissions, kickbacks, and override payments to any consumer they are dealing with.

We need to see national regulation of property investment and it needs to come under the ASIC umbrella, to co-exist with financial products and credit lending products, but be a separate act requiring formal qualification of practitioners working in this specific field.

Under this legislation, anyone charging fees for advice or receiving commissions for the purchase of real estate for ‘investment purposes’ would need to be licensed and regulated. A purpose test would determine what constitutes ‘investment purpose’, such as whether the real estate is purchased for income and capital growth returns.



Peter Bushy – President of Real Estate Institute of Australia (REIA) bushby-profile


REIA has spoken to ASIC and the SMSF Professionals Association of Australia about concerns that unlicensed "spruikers" have been offering advice regarding property and SMSFs.

REIA agrees that property professionals should not be licensed as financial advisers but that it would be beneficial to educate agents on what they can and can't do in terms of dealing with SMSF investments.

REIA would welcome working with ASIC in developing guidelines for real estate agents for the provision of advice on investment property relating to SMSFs.

Jacque Parker – President of Real Estate Buyers Agents Association of Australia (REBAA)jacque-parker-porfile-3


As Australia’s leading property industry body representing the professional standards of buyer’s agents, we support regulation around any advice provided to consumers where the purpose of a purchase is for investment.

Accredited buyer’s agents work differently to your typical “property advisor” in that the services we provide are strictly in relation to the direct purchase of real property. We are also regulated to the point where we have to meet minimum standards which include a full real estate licence, ongoing regular Continuing Professional Development (in states where applicable) and hold mandatory Professional Indemnity insurance for the safety and benefit of consumers. The provision of advice to consumers also needs to be accompanied by the Financial and Investment Advice clause that is currently in all standard Buyer’s Agents agreements which states:

“The Principal acknowledges that any financial or investment advice provided by the Agent to the Principal is of a general nature only whose preparation does not take into account the individual circumstances, objectives, financial situation or needs of the Principal. The Principal is advised to consult with their own independent or financial and/or investment advisor.”

This information (referred to as material fact under the Property Stock and Business Agents Act) includes the client's budget, financial capacity (in the form of finance pre-approval) and the details of their brief for a particular search. Reputable buyer’s agents already make this very clear to potential clients. Many have disclaimers clearly communicated on their agency websites which encourage buyers to consider taking advice from the holder of an Australian Financial Services Licence before making a decision on a financial product.

National licensing has the capacity to ‘dumb down’ the industry as recommendations include removing CPD for agents and possible removal of licensing requirements for commercial agents and we don't agree with this at all.  REBAA is all for high levels of education and this includes full licences for buyer’s agents as well.


Rosemary Johnston - Acting president of  Property Investment Association of Australia (PIAA)



This is not something they have excess funds to consider repeating too many times in their lives.  It is important they have a trusted property investment advice sector to support them with a sound foundation for informed decision making that considers the following:

1.  The potential performance of the investment including during its acquisition, holding and exit phases.

Real estate agents are legally able to employ puffery and make exaggerated claims.  This is not appropriate here for a considered investment decision .

The current system is rife with Vendor's Agents taking commission from the developer and giving investment advice to the client in the same transaction.  This is illegal in most states and ethically very questionable.

Referral partners entering into shared commission arrangements with Vendors Agents also need to consider their position.   Is the property investment advice being given covered by PI insurance, it isn't in agents PI insurance, or are they likely to be dragged into the mire?

2.  The client's risk profile and appetite for investment.

How stable is their family life, their career and their income?  How much risk are they wiling to take and how can planning manage or mitigate those risks for the client over the life of the investment?  This is a complex area that requires considerable education and experience to deliver.

3.  Their time frame of the investment that leads to considerations of inheritance or estate planning, and taxation to support the equity being created by a performing asset being effectively delivered to the client.

Currently financial planners deal with SMSF and estate planning and most have limited interest or experience in property, real estate agents deal in home sales, and property investors are being left at the mercy of the spruikers and the educators with one strategy fits all.  We need a dedicated property investment advice sector with professional educational standards, coverage by PI insurance for the advice and membership of a Professional Association with the capacity to discipline members who have complaints registered against them.  This will support the investors having a very real and consistent opportunity to achieve their goals.

Property Observer asked ASIC to comment on the matter but they declined.


Whose opinion would you like to have added to the list?

Email and we’ll consider getting their viewpoint.

Nicola Trotman

Nicola Trotman

With a penchant for the written word, Nicola has built a career doing just this – now Creative Director at thriving Melbourne-based PR agency, Greenpoint Media.

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