But lawyers, real estate professionals and peak industry bodies have voiced concerns about the impact on the sector amid a lack of detail on the proposed reforms.
Real Estate Institute of NSW chief executive Tim McKibbin said the potential negative effect of the reforms was a concern, but it was hard to assess given the changes remained unclear.
In May, the federal government announced a second stage of industry consultation on the reforms, following feedback from an initial consultation round in 2023.
“We’ve had the benefit of a presentation from the Attorney-General’s department but that presentation indicated that they were still in consultation,” McKibbin told Australian Conveyancer.
“They are certainly trying to minimise the impost both from an administrative commitment and costs, nonetheless there will still be a significant burden.”
McKibbin said one aspect was clear – property professionals would need to get across a range of new terms that would accompany the extra obligations on the sector.
He pointed to terms such as client due diligence (CDD), verification of identity (VOI), know your client (KYC), anti-money laundering (AML) and counter- terrorism financing (CTF). “We do know that people will have to comply with all of those obligations and there’s going to be overlap,” he said. “What we are hoping to be able to do is to work with other service providers in the property transaction so there is not a doubling up of costs.”
Even so, he forecast big set-up costs for businesses in getting compliant.
“I am concerned, based on what New Zealand real estate agents have been through,” McKibbin said, referring to the introduction of stricter AML/CTF laws there.
New Zealand lessons
When Tranche 2-style reforms were introduced in New Zealand, they required many real estate agents to hire extra staff, with additional costs said to reach $NZ100,000.
While most mid-size and large businesses in New Zealand were able to cope with the extra costs, some smaller players were hit hard, according to McKibbin.
“Some of the smaller offices over there found the burden too onerous and as a consequence they closed the business or merged with other businesses.”
Lawyers, too, are worried about the burden of the new laws, especially at small firms.
Indeed, the Law Council of Australia, in its submission to an inquiry into the reforms, said it was key that sole practitioners and small practices, particularly in regional and remote areas, were not burdened with excessive AML/CTF obligations.
