New seller disclosure laws in Queensland are contributing to a housing market slowdown, with documentation delays causing a contract “bottleneck”.
Real estate agents say there’s anxiety and frustration over the regime, which came into effect on August 1 and is designed to increase transparency in property transactions and protect buyers.
Sellers must provide a mandatory comprehensive disclosure statement before a contract is signed, with information including land contamination, zoning, heritage listings, transport resumption plans and accurate rates and water charges.
New laws ‘causing headaches’
Brisbane agent Brett Andreassen said the legislation has had an immediate, widespread impact on the housing market.
“Right now, it’s frozen,” Mr Andreassen said.
“It’s stopping the ability to do contracts … because the entire process is bottlenecked.
“It’s causing headaches across the board.”
Brett Andreasson says agents are already experiencing delays of up to 10 days in getting required documentation. (ABC News: Lexy Hamilton-Smith)
Mr Andreassen said agents were already experiencing lengthy delays of up to 10 days in getting the full suite of documentation required from relevant agencies and departments.
“Previously, I could get a phone call today from someone wanting to sell, we could book in to get the photos for tomorrow, and have the property on the market within days,” he said.
“[That’s] because we’d have a 48-hour turnaround on the paperwork that was required for the contract.
“Now, we’re waiting seven to 10 days for all the paperwork. It’s resulting in lost momentum.”
The new laws will allow buyers to cancel the sale if certain information is not given to them by the seller. (ABC News: Pete Mullins)
It’s a sentiment echoed by Antonia Mercorella from the Real Estate Institute of Queensland, who said sales had slowed, particularly for units and apartments.
“What we’re seeing playing out now is what we feared, which is that it can take time to obtain the necessary information from the relevant suppliers,” she said.
“Realistically, it’s going to take a number of weeks, if not months [for the housing market to pick back up].”Agents ‘freaked out’
Fellow Brisbane agent Gabrielle Trickey said the additional requirements were impractical and complex.
“It’s been a nightmare,” Ms Trickey said.
“I know one agent who sent out a disclosure statement that’s close to 100 pages … not even including the contract.
“If you’re a first home buyer, you’re just buggered — you’re looking at so many pages before you even get to the contract.”
Gabrielle Trickey says real estate agents are “freaked out” by the potential for last-second cancellations by buyers. (ABC News)
The reforms enable buyers to terminate a contract up until settlement if the required disclosure documents are not provided, or contain insufficient or incorrect details.
“As agents, we’re all freaked out [by that],” Ms Trickey said.
Ms Mercorella said sellers and agents were “right to be nervous”.
“I’ve spoken with a number of lawyers who have expressed the view that the regime will be used by some to terminate contracts … we’ve seen the experience in other jurisdictions,” she said.
Antonia Mercorella says agents are concerned buyers will use the laws to back out of sales. (ABC News: Michael Lloyd)
“It’s well-known that some buyers will get cold feet and will look for opportunities and grounds for termination.
“So, understandably, there is a degree of nervousness that is being experienced.”
‘Guzumping’ fears
Mr Andreassen said the uncertainty had created the “potential” for “gazumping”, which occurs when a buyer and seller agree on a price, but the seller backs out before the paperwork is complete.
A $3m ‘headache’ predicted from new Queensland real estate laws
“It essentially means that if there’s a delay between offer and acceptance and the contract being prepared, another buyer could come in and place an offer and beat them to the punch,” he said.
“Queensland has always avoided it … but it’s a real possibility because of these ridiculous delays that we’ve got.”
He said many prospective buyers would also likely be “bitterly disappointed” by what’s contained in the disclosure statement.
“People want to know flood [history], illegal improvements or renovations and termite/asbestos [history] … but there’s no requirement for the disclosure of those three things.”
The new laws don’t cover flooding history, pest infestation, asbestos presence, or utility connections. (ABC News: Eddy Gill)
Ms Mercorella said the REIQ has raised agents’ concerns with the state government.
“Whenever new legislation starts, it causes a level of disruption … and frustration,” she said.
“We have been given assurances that they are monitoring and watching closely.”