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Should First Home Buyers be able to access their Superannuation to assist in the purchase of a home?

Joe Hockey recently announced that the Government is considering providing first home buyers access to their superannuation to assist them in the purchase of their first home.

When considering whether it would be advantageous to provide these buyers with access to their superannuation, along with what the government is attempting to achieve, you need to take into account several considerations.

The first of these is the current market conditions. The market conditions that we are currently experiencing in Sydney (and in parts of Melbourne) are not indicative of what the property market is like in other parts of New South Wales or other capital cities for that fact.

You need to consider what percentage of the population will be assisted by this policy if implemented? When it comes to first home buyers it is still not known what actual percentage of home purchasers in recent times have been first home buyers. I have read figures that state as low as 14% of purchasers in the market are first home buyers  I wrote about this issue in First Home Buyer Figures Understated.

Then there is the superannuation, it is estimated that an average person at 30 years of age has about $15,000 in their superannuation.

Interest rates also need to be mentioned as well. While the low interest rates are good for those first home buyers that are coming into the market they are not necessarily helping those that are saving for a deposit as the rates being offered by the banks on deposits is at an all-time low.

In addition to the above there is already a First Home Owner Grant scheme in New South Wales which currently provides a grant of $15,000 but only applies to eligible first home owners who purchase a new home or build their home.

Last week I was interviewed by Australian Broker TV on the topic and I have to say that in the process of trying to form an opinion, I discovered what an absolute mine field this topic is.

So what are some of the disadvantages and advantages of the proposal?

Advantages

  • The main advantage is that first home buyers would have access to funds that they would not otherwise have access to for a deposit. In the Sydney housing market where prices are significantly higher than other areas of the state this could assist greatly.
  • Owning your own home is an asset and many believe that it should form part of a retirement plan in any case. The advantage of home ownership come retirement is that you do not have to worry about having to find the money to pay rent along with having enough income to fund your day to day living expenses.

Disadvantages

  • Once the funds have been withdrawn from their superannuation they won’t be available come retirement adding pressure to retirement savings.
  • There is an argument by some that it will bring more buyers into an already heated market and that this will drive up property prices even further.
  • If the superannuation is used to buy a house in the wrong area they could in fact go backwards financially.
  • The proposal somewhat goes against the goal of assisting people saving and funding their own retirement through initiatives such as the Superannuation Guarantee contributions

Having considered the advantages and disadvantages I have to say that there are counter arguments for each and while the government has announced they are thinking about the initiative there is not much detail available at this stage.

Here is some more food for thought

  • Similar schemes are available in Canada, New Zealand and Singapore. In Canada for example the amount withdrawn from superannuation has to be paid back in a certain time period. This obviously minimises the effect on the available superannuation come retirement.
  • What happens with the funds that are withdrawn from superannuation when they sell the home and purchase another, or what about the case when they don’t purchase another home?
  • What will happen when they actually retire how will the funds they withdrew be treated?
  • What happens should interest rates go up and they cannot meet their mortgage repayments, or they lose their job and they subsequently default on the mortgage. In this case they have lost their home and the superannuation that went into the purchase of that home.
  • Just like house prices and capital growth, the performance of your superannuation is not guaranteed and who is to say what amount you are going to end up with come retirement. If the market goes down you could in fact lose more that the amount that was pulled out to purchase the home.
  • What impact would there be on pension costs and the pension available to those that took advantage of the scheme if it was introduced.  (if in fact there is still a pension scheme available for those younger first home buyers by the time they retire)
  • There are sceptics that believe that the Government is trying to be seen to address an issue in an attempt to gain votes, in this case from the younger generation who are not indicative of the normal Liberal voter.

The proposal somewhat fails to address the underlying issue of the current market conditions that have made it harder for first home buyers to enter the market. That issue takes you off into a whole other minefield where you would need to look at the issue of housing affordability, negative gearing and supply and initiatives such as new land releases, higher density housing.

So in summary while I think the idea has merit, I think significant thought needs to go into the detail on how the proposal would operate and what protections are put in place.

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NSW Government vows to crackdown on under quoting – Politics at it’s best!

I am sure that many of you like myself saw the reports in the media on the weekend with the NSW Premier Mike Baird and the Minister for Fair Trading Matthew Mason Cox vowing to crack down on agents that under quote if re-elected at the NSW election being held on 28 March 2015. This was also confirmed in this article on the Liberal Party website.

If we look at the Property, Stock and Business Agents Act 2002 (the Act) in this regard:
Section 72 of the Act prohibits an agent from making false representations with respect to the agent’s true estimate of the selling price of a property to either a seller or prospective seller of residential property.

Section 73 of the Act prohibits an agent, by any statement made in the course of marketing a property pursuant to an agency agreement for the sale of a residential property, falsely understating the estimated selling price of the property.

Section 75 of the Act extends the provisions of sections 72 and 73 to ‘estimated price range’ in the same way as it applies to ‘estimated price’.

The maximum penalty for a breach of the provisions is $22,000. It is interesting to note that there have been no fines issued or prosecution of agents for this practice in recent years.

EAC has been in discussions with Fair Trading Officers with regard to, what appears to be, an increase in the incidence of “under quoting” by some agents and the impact of significant price escalation driven by unprecedented consumer demand. This market activity and selling price increases has made the task of estimating future selling prices extremely difficult.

The comments made by both the Premier and the Minister fail to recognise the existing legislative requirements and the impact on consumer expectations of the agents if properly enforced. The greater majority of agents understand their responsibilities. For the few that don’t the law is already in place.

With the election looming I believe that the attack on estate agents was a “knee jerk” reaction and was purely for political gain (read votes) and not in the best interests of consumers or agents. The reality is that many well researched and well prepared estimates of selling prices by agents are often overtaken by buyer competition and market forces, factors outside the agents control and not readily predicted.

EAC enjoys a healthy working relationship with NSW Fair Trading and will continue to work with them to ensure that the interests of the industry and consumers are protected.

EAC Chairman Dale Whittaker is also disappointed with the approach that the government took on the weekend and he believes that the approach that NSW Fair Trading should be taking is to raise the entry level standards for the industry and through quality ongoing training.

ios8.2 update - crombie.com.au

Apple releases the long awaited iOS 8.2

Apple iOS 8.2 (build number 12D508) has now been released. This is a major release, the largest since iOS 8 was released and contains many bug fixes and is available for iPhones, iPads and iPod touches. To download this update you will need to use iTunes or WiFi. The update on my iPhone 6  that was on version 8.1.3 was 476MB.

Before running the update I recommend that you backup your device including any purchases and then once the update has run I always perform a hard reset and check for any updates to applications in the App Store.

Below is the iOS Official 8.2 change log that was released by Apple.

Apple Watch support
New Apple Watch app to pair and sync with iPhone, and to customize Watch settings
New Activity App for viewing fitness data and achievements from Apple Watch; appears when Apple Watch is paired
Available on iPhone 5 and later

Health App improvements
Adds the ability to select the unit of measurement for body temperature, weight, height, distance, and blood glucose
Improves stability when dealing with large amounts of data
Includes the ability to add and visualise workout sessions from 3rd-party apps
Addresses an issue that may have prevented users from adding a photo in Medical ID
Fixes units for vitamins and minerals
Fixes an issue where Health data wouldn’t refresh after changes data source order
Fixes an issue where some graphics showed no data values
Adds a privacy setting that enables turning off tracking of steps, distance, and flights climbed
Stability Enhancements
Increases stability of Mail
Improves stability of Flyover in Maps
Improves stability of Music
Improves VoiceOver reliability
Improves connectivity with Made for iPhone Hearing Aids

Bug Fixes
Fixes an issue in Maps that prevented navigating to some favorite locations
Addresses an issue where the last word in a quick reply message wasn’t autocorrected
Fixes an issue where duplicate iTunes purchased content could prevent iCloud restore from completing
Resolves an issue where some music or playlists didn’t sync from iTunes to the Music app
Fixes an issue where deleted audiobooks sometimes remained on the device
Resolves an issue that could prevent call audio from routing to car speakers while using Siri Eyes Free
Fixes a Bluetooth calling issue where no audio is heard until the call is answered
Fixes a timezone issue where Calendar events appear in GMT
Addresses an issue that caused certain events in a custom reoccurring meeting to drop from Exchange calendar
Fixes an certificate error that prevented configuring an Exchange account behind a third-party gateway
Fixes an issue that could cause an organizer’s Exchange meeting notes to be overwritten
Resolves an issue that prevented some Calendar events from automatically showing as “busy” after accepting an invite.

Requirement for Pool Owners to obtain a Compliance Certificate extended until 29th April 2016.

In NSW, the owners of properties with a swimming pool and/or a spa pool are required to register their pools and spas on the NSW Swimming Pool Register. The Provisions of the Swimming Pools Act 1992 requiring pool owners to obtain a Certificate of Compliance before selling or leasing their property will now commence on 29 April 2016.

In a media release sent out by Paul Toole, Minister for Local Government last Thursday 26 February 2015 it was advised that “pool owners will be granted a 12-month extension to make sure they have a valid compliance certificate before the property can be sold or leased.” This means that if you are selling or leasing your property you do not need to attach a Swimming Pool Compliance Certificate to the Contract for Sale of Land until 29 April 2016.

Minister for Local Government Paul Toole stated that “The evidence showed there was a high failure rate for initial inspections and a heavy demand to make pools compliant”

We have received several calls from Members in regards to the change and it is interesting to note that despite the announcement the NSW Government Swimming Pool Register website still states the 29th April 2015 as can be seen below.

NSW Government Swimming Pool Register

Further to this when you go into the Register your pool section on the NSW Office of Local Government it mentions nothing of the change nor does the downloadable Swimming Pool Register – FAQ document which still references 29 April 2015. It is not until you navigate to the section on Selling or leasing a property with a pool or spa that you will find the change.

There was no communication of this change to EAC despite being involved in discussions in the past. I would have thought that the supporting websites and documentation would have been updated at the same time as the announcement had been made but obviously this has not been the case and I have expressed this view and requested that the sites be updated in calls to the Office of Local Government and the contact for Minister Toole.

The Media release can be viewed here.

Change to NSW Sales Agency Agreements from 1 March 2015

In late 2014 the Property, Stock and Business Agents Regulation 2014 came into effect. There were several changes introduced as part of the update to the regulations and one of the changes introduced was in regards to agency agreements.

Under clause 8, section 3 of the regulations it is stated that on and from 1 March 2015, if the agency agreement includes a term that a commission is payable even if the sale of the property is not completed, the agency agreement must include a warning notice.

The notice must be in the form of:

“WARNING: The term immediately above provides that a commission is payable under this agreement even if the sale of the property is not completed.”

This notice must be included in the agency agreement immediately following the commission term and must be no less prominent than the commission term.

EAC Agency Agreements Warning Clause.Sample clause from the updated EAC Sales Inspection and Exclusive Selling Agency Agreement.

The change applies to agency agreements for the sale of residential (including land) and rural property and Businesses. We have updated our printed and electronic forms to include this change and they are now available for purchase and use on-line.

To ensure compliance I recommend that you check if the agency agreements being used for the sale of the property types outlined above include a term that a commission is payable even if the sale of the property is not completed and if so that the warning notice is also included.

Federal Government proposes charging of fees for foreign investment in residential property

The Federal Government has released a consultation paper called Strengthening Australia’s Foreign Investment Framework and is seeking views on proposed reforms to our foreign investment framework in relation to residential property and agriculture.

The proposed reforms include the introduction of an application fee where foreign persons will require prior approval to purchase residential real estate. The Government believe that the introduction of the policy will increase the amount of available housing stock. Given recent information in the media I am not sure that there are any real concrete figures on the amount of foreign investment in residential property in Australia.

While most people would think of foreign investors as people who live overseas the paper covers foreign persons who may be temporary residents or non residents.

Foreign persons can apply to purchase vacant residential land for development and newly constructed dwellings in Australia.

Non resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, reflecting the fact that foreign persons who are temporary residents need a place to live during their time in Australia, temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia. The purchase of an established dwelling is conditional on the foreign person selling the property when they leave Australia. Temporary residents cannot acquire established dwellings for investment (rental) or holiday purposes.

The proposed fees for foreign investors for residential property are:

  • $5,000 for properties valued under $1 million;
  • $10,000 for properties equal to or greater than $1 million
  • Beyond this the fee would then increase in increments of up to $10,000 for each additional $1 million in property value.

Compliance and enforcement would be managed by the creation of a new area within the Australian Taxation Office and the paper outlines a raft of civil and criminal penalties for both individuals and companies who those breach, or are found to have assisted (read real estate agents) in the breach the foreign investment rules.

The paper will be be reviewed in greater depth by the Practice Support team at Estate Agents Co-operative and a submission made if deemed necessary.

At only 33 pages the paper is an easy read and be viewed at the Australian Government Treasury website.

sold - estate agents co-operative ltd

First Home Buyer Figures Understated

The Australia Bureau of Statistics (ABS) have released revised First Home Buyer (FHB) figures after an investigation into the accuracy of estimates of loans to first home buyers.

The figures released in November 2014 had put the number of FHB loan commitments at 6,061 but the revised figures now put the number of commitments at 7,627, an increase of 25.8%

“Initially we thought the fall-off in first home buyer loans over the last two years was due to reduced affordability arising from changes in grants, rising house prices, increased investment housing loan activity and general economic conditions,” Ms Hodges said in a statement.

“However, subsequent analysis and follow-up with lenders has confirmed that the drop was partly due to under-reporting by some lenders.” said Ms Hodges.

The ABS is now working with the Australian Prudential Regulation Authority which collects the first home buyer loan data for the ABS to ensure all loans to first home buyers are recorded in the future, regardless of whether they receive a first home owner grant or not. In the meantime, the ABS will adjust first home buyer data for this under-reporting using estimates based on data provided by lenders that reported correctly.

Although the ABS has released revised figures for November 2014 it could well be that the figures released for FHB’s over the past two years has been significantly understated.

The First Home Owner Grant scheme in New South Wales provides a grant of $15,000 and only applies to eligible first home owners who purchase a new home or build their home. This grant will reduce to $10,000 on 1 January 2016.

EAC meets with NSW Fair Trading and Work Cover about Asbestos

The real estate industry is becoming increasingly aware of the potentially far reaching effects of the “Mr Fluffy” loose fill asbestos issue, with Work Cover identifying 26 NSW Local Government areas currently at risk.

The problem confronting all agents and property managers is that the presence of loose fill insulation containing asbestos is a “Material Fact.”  Currently, affected properties must not be offered for sale or lease and agents have a clear responsibility to enquire from their client whether the property is insulated and if so what type.  . If the answer is “yes” or “not sure” to the presence of loose fill type then the client should obtain an inspection and report from a qualified asbestos assessor.

However, the “Mr Fluffy” issue has become a catalyst for the industry to discuss Asbestos and how agents and property managers are to deal with properties affected by it and what are the correct steps for them to take in enquiring about asbestos in the property.  This is particularly crucial since agent and property manager’s Professional Indemnity Insurance Policy does not cover the risks associated with asbestos related claims.

In January, Work Cover met with Estate Agents Co-operative Ltd, NSW Fair Trading and REINSW to discuss this issue.

During the meeting, discussion was had regarding the need to clearly outline to agents, property managers and consumers the steps that they need to take regarding asbestos in properties.  WorkCover will develop a factsheet regarding Asbestos, to tackle this need.  EAC will provide consultation on the content of this factsheet.

“The protection of agents, property managers, and consumers is paramount in this issue.  And whilst the WorkCover factsheet is necessary, it is very much a first step.  Agents and Property Managers cannot be expected to make a qualified assessment of whether asbestos is present in a property,” said Geoff Hunter, EAC Industry Liaison Officer.

Clear directions are crucial for the real estate industry in the dealing with asbestos.  Whilst the “Mr Fluffy” issue is of a great concern, it has aided in bringing to light how inadequate the procedures, for agents and property managers, in dealing with asbestos are.

The Estate Agents Co-operative will continue to work with Work Cover and NSW Fair Trading to lobby for any and all necessary changes to regulation and policy in order to ensure the protection of agents, property managers and the consumers.

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New Internet Marketing Report Released

EAC is pleased to announce an update to the Internet Marketing Report for realestateworld.com.au.

The update to the Internet Marketing Report has been made available to realestateworld.com.au  subscribers.

We hope that you will love the new features and fixes we’ve packed into this update.

Summary of changes to Internet Marketing Report:

  1. Filter by Agent – Allows the user to run reports on all agents or just on the listings for a specific agent.
  2. Time Frame – Allows the user to run reports for the ‘Total Campaign’ of a listing or for the past ‘Week’ or ‘4 weeks’.
  3. Source – Allows the user to filter search results to the websites that the listing appears on, i.e. ‘All Websites’, ‘realestateworld.com.au’, ‘My Website’ (agent website)
  4. Branding – Allows the user to customise the report to a professionally branded standard.  Including: Agency logo, Agent Photograph, Agent contact details, Social media integration
  5. Professional and easily understood data – Internet Marketing Report provides Full Campaign Details which are designed to be easily understood by the vendors; including: List Price, Date of first advertised, days listed, total campaign interactions, total campaign shares. This feature is available to Pro and Elite subscribers only.
  6. Export – Allows user to easily export report data to CSV file for future analysis.

The new Internet Marketing Report will be available to realestateworld.com.au subscribers from 1 February 2015. Make sure you look out for it in your inbox.

The Best of the Best in NSW Real Estate

Winners named in the EAC/REIA NSW Awards for Excellence 2014.

Sydney, NSW – 25/9/2014 – EAC/REIA NSW Awards for Excellence 2014, today announced its 2014 Winners. Embodying excellence and professionalism in the real estate industry, the honorees were celebrated during the awards ceremony on 25th September at the Sofitel Wentworth, Sydney.

The inaugural awards saw applicants compete for a total of 13 awards covering all aspects of the real estate profession from innovation to corporate support, business broking and of course the highly contested award for the best small, medium and large residential agency.

The Awards for Excellence allowed nominations from the industry, through NSW Affiliate Council Members of the REIA including Estate Agents Co-operative, LJ Hooker, Professionals Real Estate and First National with winners being selected by a panel of industry experts who judged each submission.

The 2014 Awards for Excellence were presented to:

Awards-for-Excellence-2014-Winners

“The Agents and Individuals named as winners have set the standard for all real estate agents across NSW and Australia,” said DAVID CROMBIE, CEO OF EAC.  “Their naming as award winners is a testament to their skill, ingenuity, and professionalism.”

“These awards are important in not only recognising NSW’s leading real estate professions, but also as they provide an important opportunity for agents to learn from one another and also strive to produce innovative ways of doing business,” said AMANDA LYNCH, CEO OF REIA.

These awards provide an opportunity to be recognised at both the state and national level, with winners from the New South Wales Awards for Excellence progressing onto the REIA National Awards for Excellence in Perth on 12 March 2015.

ABOUT THE AWARDS FOR EXCELLENCE:
Hailed as “Real Estates highest honor” by Estate Agents Co-operative, The Awards for Excellence is the premiere event for EAC and REIA to encourage, recongnise and promote excellence and best practice in the profession.  These awards provide an opportunity to be recognised at both state and national level and winners from the NSW Awards for Excellence progressing to REIA National Awards for Excellence in Perth on 12 March, 2015.

ABOUT EAC:
Estate Agents Co-operative Ltd, or EAC, is a co-operative of real estate agents, which formed in Sydney in 1960 to exchange information about properties for sale.  From humble beginnings, when EAC comprised just seven members in the metropolitan area, the Co-operative has now grown to include several hundred members across New South Wales and the ACT. EAC is a premium service provider to the real estate and property industry and provides a range of services covering, Membership, Practice Support, Training, Listing Management, Property Information, Web Sites and Real Estate Forms to over 2,000 Real Estate offices comprising of both independent offices and franchises from all the major franchise groups, valuers and government departments throughout Australia.

ABOUT REIA:
The Real Estate Institute of Australia (REIA) is the national professional association for real estate agents in Australia and since 1924 has worked to represent the real estate sector on a range of varied and important issues.