Real Estate Overhaul: Victoria and NSW Unveil Sweeping Reforms
Australian state governments in Victoria and New South Wales have announced separate legislative proposals to regulate real estate practices, including underquoting, price disclosure, and mandatory building inspections.
Victoria: Proposed Auction Laws and Price Disclosure
The Victorian government, led by Premier Jacinta Allan, has announced plans to introduce legislation requiring real estate agents to publish a vendor's exact reserve price at least seven days before an auction or fixed-date sale.
Consumer Affairs Minister Nick Staikos stated the proposal aims to address underquoting, following a "Bidding Blind" investigation by a local masthead which found that more than half of 26,000 Melbourne properties auctioned sold above their advertised price range.
REIV Opposition and Alternative Proposal
The Real Estate Institute of Victoria (REIV), representing over 5000 real estate professionals, has formally opposed the government's plan. REIV chief executive Toby Balazs described the proposal as impractical, arguing that disclosing an exact reserve seven days in advance could lead vendors to set higher reserves, potentially inflating prices.
The REIV's alternative blueprint includes:
- Reserve price confirmation: Vendors would confirm their reserve price is within the advertised 10 percent price range at least three days before an auction.
- Private sale pricing: Properties would be advertised at a single "owner's asking price" rather than a 10 percent range.
- Demerit point system: Introduction of a license demerit point system for agents, with potential suspensions or bans.
- Free building inspections: Prospective buyers would receive free building and pest inspection reports, with costs absorbed by the successful buyer.
- Sale price disclosure: Requirement to disclose sale prices for all residential properties once a contract becomes unconditional.
Mandatory Sale Price Disclosure
The Victorian government also plans to introduce legislation prohibiting agents and homeowners from withholding property sale prices. Minister Staikos described this as an "Australian-first" law, stating that undisclosed sold prices can distort the market.
The legislation is expected to be introduced to parliament in June 2026, with implementation targeted for 2027. The government plans to collaborate with the industry to finalize policy specifics, including the timeframe for disclosure.
Vendor-Funded Building and Pest Reports
Premier Allan has pledged to mandate vendor-funded building and pest reports if re-elected. Consultations are planned for this year to determine report content, conflict of interest safeguards, report costs, and accreditation for inspectors.
Opposition Leader Jess Wilson criticized the plan for lack of detail and questioned the government's timeline.
Case Example: Allegations of Doctored Building Report
A separate incident involving first-home buyers Estelle and Josh Forrest in Mooroolbark, Victoria, has highlighted concerns regarding building inspection reports.
According to the couple, in May 2026 they agreed to purchase a townhouse after an estate agent from Okas Real Estate provided a building inspection report stating "No major defects found." The agent had encouraged them to remove the building report condition from their offer, stating the vendor had arranged an inspection.
After signing the contract, Ms. Forrest contacted the inspector directly and obtained the original 75-page report, which documented:
- Heavy dampness in the subfloor
- Potential for major structural defects
- Fungal decay and mould
- An incidence of major defects classified as "HIGH"
Vishal Safi, a director at Okas Real Estate, acknowledged the discrepancy but stated he was unaware of the alteration. After media inquiry, he arranged for the contract to be terminated and the deposit returned.
Reactions from Industry and Consumer Groups
Cate Bakos, buyer's advocate and board chair of Property Investment Professionals of Australia, expressed concern that the proposed vendor-funded report system could increase risk of deception, as agents might shop for lenient inspectors.
Jacob Caine, president of the REIV, stated the case highlights the need for additional protections, including licensing for inspectors and penalties for unethical practices.
Erin Turner, CEO of the Consumer Policy Research Centre, supported the scheme as a protection for buyers but emphasized the need for robust anti-fraud measures.
New South Wales: Stricter Underquoting Laws
The New South Wales government has announced plans to introduce legislation to address underquoting and other deceptive practices by agents.
Key Legislative Changes
- Increased fines: Penalties for agents caught underquoting will increase fivefold to $110,000, or three times their commission, whichever amount is greater.
- Dummy bidding: The practice of "dummy bidding" will incur a $110,000 fine.
- Mandatory price guides: Sellers will be required to publish a price guide on all property advertising.
- Statement of information: Agents must provide a "statement of information" to buyers, detailing comparable sales and average prices.
- Prohibition on lower advertising prices: Agents will be prevented from advertising a property at a price lower than a previously rejected offer.
NSW Fair Trading Minister Anoulack Chanthivong stated the reforms are intended to protect homebuyers and enable NSW Fair Trading to enforce regulations more effectively.
National Context
The proposed reforms in both states follow a "Bidding Blind" investigation by a local masthead, which highlighted underquoting practices and prior advice to the Victorian government regarding mandatory timely publication of residential sale results.
Consumer groups have supported timely sale price disclosure, emphasizing its importance for transparency in the home-buying process.