The move to an electronic conveyancing platform for house and land transactions in WA is being rushed, according to a peak lobby group.
The move to an electronic conveyancing platform for house and land transactions in WA is being rushed, according to a peak lobby group.
Property buyers and sellers have been warned they face a conveyancing cost increase of up to 20 per cent from December 1 this year, due to a state government mandated electronic platform for all house and land transactions.
Late last year, the Western Australian Registrar of Titles ordered the use of all land registry documents to be lodged electronically through a software system operated by Property Exchange Australia (PEXA).
The move was designed to break down one of the last bastions of paperwork in the property industry, and to remove the requirement for buyers and sellers representatives to physically meet with banks at settlement.
PEXA was established in 2010, part of a Coalition of Australian Governments reform package designed to streamline the economy.
At the time, the Productivity Commission estimated e-conveyancing could deliver an economic benefit of $70 million per year, by removing uncertainty and complexity for borrowers and lenders.
Investors in PEXA include the WA government, which has pitched in $39 million, the big four banks, Macquarie Bank, and the NSW and Victorian state governments.
According to its 2015-16 annual report, Landgate is another stakeholder, owning a 15.9 per cent stake in PEXA.
The first land transaction was processed using the system in June 2014, and 12 months later, more than 150 local firms had registered to use the system.
But the peak body representing conveyancers in WA, the Australian Institute of Conveyancers, says the rush to mandate the use of the system by December 1 will result in a significant cost increase for consumers.
Both property buyers and sellers are charged a $107 fee to use PEXA, representing a 20 per cent cost increase on the average fee for a property sale and an 11 per cent increase on the average fee for a house purchase, AIC WA chief executive Dion Dosualdo said.
However, Mr Dosualdo said conveyancing businesses were facing even higher costs to implement the system, expenses that would likely be passed on to consumers.
“There is also a peripheral cost in supporting e-conveyancing,” Mr Dosualdo told Business News.
“Mandating it by December 1 means that you have to change all your processes within your office, you have to train your staff, there are a whole bunch of peripherals, so when you add it all up, 20 per cent is conservative.
“We would like for business owners and conveyancers to be able to look at the system, integrate it and pass on the efficiencies and savings to consumers.
“But we’ll need a good amount of time to do that; there should be a transition period.”
Mr Dosualdo said AIC had requested that the Australian Competition and Consumer Commission investigate the legality of the mandate, which he said was equivalent to enforcing a monopoly in the absence of any competitors for PEXA.
He said he was particularly concerned about the impact of PEXA’s plans to float on the stock exchange within the next two years.
“With PEXA lined up for a public float, 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,” Mr Dosualdo said.
