Property Investment & Advice
Cameron Fisher | 16th January, 2014
Rapid Growth Calls for Regulation
Without the appropriate accreditations I cannot advise you to buy a single share but anybody can advise you to buy a $1M property.
The property investment and advice industry has seen rapid growth over the past years, people, both consumers and business are pushing for this lucrative industry to be regulated.
A survey, conducted by SMSF Adviser, has revealed that of 469 respondents, 38.8% felt no regulation was necessary, while 61.2% said they believed it should be regulated.
Property Investment Professionals of Australia (PIPA) chair Ben Kingsley said industry is reluctant to support the regulation of property investment advice due to its hesitancy to take on more compliance burdens.
Mr Kingsley said the regulation of property investment advice would also discourage those who rely on commissions from kickbacks.
Contrary to Mr Kinsley’s opinion I believe the industry must be regulated regardless of a little extra paperwork. Regulation will eliminate most of the hidden commissions and referral fees that are not disclosed when these transactions occur, it will provide a lot more transparency for the industry which is important when a significant finical decision is made.
Would you reconsider purchasing an investment property in particular an off the plan property that was not going to be completed for 3 years simply because that particular investment was spruiked to you by somebody who had no formal industry accreditations and knowing that there was going to be upwards of $35K in commissions and referral fees from the transaction?
Purchasing residential property either for the purpose to invest or occupy will usually be the largest single investment of our lifetimes. Yet you go your preferred lender and if you can satisfy their criteria you can be approved to borrow upwards of $1M to purchase an investment property.
Now what type of property and investment advice do you receive when you do this? The answer is… you generally don’t receive any.
Many people are pointing their finger at the property ‘spruikers’ who use high pressure sales techniques and manipulation to convince the Australian working class that purchasing high risk, low performing off the plan properties will be their one way ticket to a happy and financially comfortable retirement without fully considering or understanding the risks and dynamics of investing in the property market.
They [property spruikers] get away with this by not directly selling the property but by selling the lifestyle, the dream of financial freedom achievable through investing in property. However in most cases the person selling this dream that has no formal real estate or investment accreditations and the spruiker is never required to disclose their kickbacks, either by way of commission or referral, from facilitating the deal. How can this be?
Leave a Reply