Government urged to ensure changes don't impact home buyers, tenants or real estate agencies
The Real Estate Institute of Australia has urged the government inquiry into Australia’s anti-money laundering laws to ensure that any changes to the laws don’t create a financial burden on home buyers, tenants and real estate firms.
REIA president Adrian Kelly said that from the market’s point of view, the drivers of booming property prices are obvious.
“Low supply, high demand, high taxes, a greater demand for houses over units and uncertainty of vendors to list new properties created by the ongoing COVID-19 pandemic are all major factors in the current market,” Kelly said. “The overwhelming majority of demand is being experienced domestically and by repatriating Australians.”
Kelly said he was pleased that AUSTRAC and the Australian Federal Police confirmed in their testimony to the Senate committee that there was no agreed evidence to correlate a strong property market with criminal activity.
Kelly also said that expert testimony was unable to clarify the total size and scale of criminal buyers, or how many property transactions were being turned over with dark money.
“The inquiry heard that of the $187 million in assets seized by authorities in the 2021 financial year, $116 million was in real estate assets. Scale needs to be carefully considered,” Kelly said. “To put this in context, the Australian commercial sales market alone over this period recorded more than $50 billion in sales, and the residential sector recorded a massive 598,000 transactions.”
Kelly said that the inquiry confirmed key issues creating undue burdens on small businesses should additional Tranche Two or Gatekeeper reporting be implemented to intercept money launderers. Kelly said that evidence from stakeholders suggested that the cost of implementing these measures would range from $10,000 to $120,000.
“For Australian real estate agencies, we estimate these costs to sit around $50,000 per agency,” he said. “If all the anticipated activities for Tranche Two reporting are implemented, the cost to the sector could easily reach the billions. At REIA, it is our job to defend against undue regulatory costs and fight for our members against draconian regulation that does not even advance the national interest.”
Read next: REIA offers three-point plan to tackle housing affordability issues
Kelly said that REIA was open to working with the government to enhance Australia’s anti-money laundering and counter-terrorism financing capabilities.
“We urge the Senate committee to deliver practical recommendations that target sophisticated money launderers without creating a financial burden on home buyers, tenants and real estate agencies,” he said. “A cost-benefit analysis led by the Commonwealth would be needed to better qualify the cost to real estate agencies versus the projected benefits of additional reform and how additional reporting will actually detect more criminal activity.”
