Consumers in Western Australia will be hit with an increase of up to 20 per cent in costs when buying or selling a property from December 1 this year, due to the State Government’s decision to force a move to the use of an electronic platform for all transactions.
The decision by the WA Government’s Land Registrar will mean traditional paper-based systems are replaced by the PEXA electronic conveyancing system – currently the only e- conveyancing system available for use in Australia, which has to date failed to attract industry support due to concerns over its security, cost and efficiency.
Originally created as a government initiative through COAG to improve property transaction in the national interest, PEXA has become a commercial enterprise with shareholders including the big four banks, Macquarie Bank, Link Market Services, the WA, QLD, NSW and Victorian state governments and large private investors.
While WA is the first state to mandate the introduction of e-conveyancing, the NSW and Victorian land registries are set to follow in 2019.
The peak body representing property conveyancers in WA has warned the rush to mandate the use of PEXA will see consumers wear the associated increase in costs.
“The consumer is going to pay more as result of this decision – PEXA fees represent an average increase in conveyancing costs to consumers of 20 per cent,” said Australian Institute of Conveyancers WA (AICWA) chief executive officer Dion Dosualdo.
“Mandating electronic conveyancing will produce a massive value shift from mum and dad property investors to the big four banks, Macquarie, private investors and the state governments.
“Once electronic conveyancing is mandated, mortgage processing costs for banks will reduce – but there is no indication that the banks will pass these savings on to consumers, or cut their settlement attendance fee.”
On top of increased costs for consumers, Dosualdo said the mandate was expected to result in more than 1,000 sudden job losses in WA in December this year across the financial services, conveyancing and legal industries.
The AICWA also had serious concerns around anti-competitive implications of the mandated switch to e-conveyancing.
“PEXA’s owners, including the big end of town and the state governments, have invested heavily in PEXA and the lack of natural demand for the platform is resulting in correspondingly large losses,” said Dosualdo.
“Mandating will help PEXA to become profitable if Landgate and the land registries in other states mandate the use of electronic conveyancing. In the absence of a competitor, this puts the state governments in bed with the banks and private industry to effectively create a government-sanctioned monopoly for PEXA.
“With PEXA lined up for a public float within the next 12 months, the banks are poised to double dip – pocketing the efficiency savings, not passing on a cent of savings to buyers and sellers, and also seeing an increase in the value of the PEXA business when it lists on the stock market.”
The AIC WA has made a submission to the Australian Competition and Consumer Commission to investigate whether the mandate would breach Australian Consumer Law.
Dosualdo said recent legislative changes in WA, NSW and Victoria related to the mandating of electronic conveyancing all pointed to voluntary industry participation and longer transition periods, to avoid impacts on consumer costs, businesses and jobs.
For example, in NSW the Legislative Impact Study indicated that a 13-year uptake period should be expected.
Dosualdo said the AICWA believed the conveyancing profession and the broader property industry were not ready to integrate with an immature system, which was not capable of resolving the range of identified issues and problems.
“The AICWA support electronic conveyancing. We simply ask that our clients are provided with a competitive environment in which to buy and sell property, and that the transition to electronic conveyancing does not adversely impact them,” he said.
“This is a large-scale change that requires more than one year to implement successfully. A longer transition period would allow time for other electronic conveyancing platforms to enter the market and provide competition, and for traditional conveyancing businesses to adjust their staffing resources and operations.
“Buying and selling a property is a highly stressful and costly process, and we have significant concerns for our clients during a turbulent conversion period to the mandated platform when the full implications have not been considered.”
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