Land and Business (Sale and Conveyancing) (Building Inspections) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 6 March 2024.)

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (16:13): I rise to speak briefly on the Land and Business (Sale and Conveyancing) (Building Inspections) Amendment Bill 2024, introduced by the Hon. Robert Simms. Whilst we appreciate the intent behind this bill, that being to provide greater transparency and confidence for prospective purchasers, the opposition will not be supporting the proposed amendments. This bill would require vendors to provide a building inspection report as part of the Form 1 disclosure process.

Whilst this may sound reasonable in theory, in practice it imposes additional cost, complexity and liability on the vendors, agents and inspectors—costs that will inevitably be passed on to the purchaser. In the housing market we are already under significant pressure and now is not the time to add another layer of red tape or expense to those who are simply trying to buy or sell a home.

The bill also creates a new avenue for legal action against vendors, agents or inspectors for any allegedly false or misleading report. This will open the door to costly disputes, uncertainty and potential delays in settlements, with little evidence that it will achieve any meaningful improvement in consumer protection beyond what already exists. South Australia already has clear and robust provisions within the Land and Business (Sale and Conveyancing) Act 1994 to protect purchasers, including requirements for vendor disclosure, cooling-off rights and the ability to obtain independent building inspections prior to purchase.

Rather than creating duplication and confusion, we believe the focus should remain on educating buyers and strengthening existing consumer awareness measures, not on legislating additional regulation. For these reasons, as I outlined earlier, the opposition will not be supporting this bill.

The Hon. R.P. WORTLEY (16:15): The government opposes the Land and Business (Sale and Conveyancing) (Building Inspections) Amendment Bill 2024. On 6 March 2024, the Greens introduced this bill into the Legislative Council.

The bill requires a vendor of residential land to pay for and provide a building inspection report to a purchaser. The bill proposes allowing a purchaser to request a report from a vendor. The vendor must provide the report within two business days of that request. The report must be attached to the vendor's statement (Form 1) when it is made available for inspection prior to an auction and when it is served on the purchaser. The report must not be more than three months old at the time the property is first put on the market. Passing of the bill may not achieve the intended outcome and would have the following consequences:

the report may not be accurate by the time the property is sold;

the requirement for the vendor to pay for the report puts the building inspector in a position of conflict due to the competing interests of vendor and purchaser; and

the report may not provide a purchaser with the information they want.

The bill contemplates further regulation of building inspectors by the commissioner for consumer affairs. It proposes that the reports should only be provided by a person who is recognised by the commissioner as a building inspector. Building inspectors are not licensed in South Australia and do not require specific qualifications to deliver services. As part of the building and construction industry review, the government is considering options for the regulation of building inspectors. For the reasons that have been outlined, the government opposes the bill.

The Hon. J.S. LEE (16:17): I rise to speak about the Land and Business (Sale and Conveyancing) (Building Inspections) Amendment Bill 2024, introduced by the Hon. Robert Simms. We are in the midst of a housing crisis, and for many South Australians the dream of home ownership is becoming increasingly difficult to achieve and can often feel impossible. This bill proposes a simple reform that will reduce the up-front cost of buying a home, provide peace of mind and allow buyers to make informed decisions.

In South Australia, while prospective buyers are encouraged to consider having a professional building inspection done before purchasing a property, it is entirely their responsibility to identify any issues that might affect their safety and enjoyment or the value of the property. These inspections are also at the buyer's expense and can cost hundreds of dollars at a time. When you are looking at multiple properties and there is no guarantee that you will be the successful purchaser, this cost can add up very quickly and become financially unfeasible. There is a worrying trend in the market where we are seeing a growing number of buyers skipping building inspections altogether. This happens quite often due to the cost of inspections.

Buyers can also be pressured, either directly or indirectly, by vendors and agents to forgo inspections to avoid missing out on their dream home. This particular situation was brought to my attention by a constituent recently. Offers subject to satisfactory building inspections are frequently viewed less favourably and, in a market where properties attract significant interest, many feel that they have no choice but to take the risk. This bill offers a simple solution, placing the responsibility on the vendor to provide a pre-purchase building inspection report.

Under this bill, vendors will be required to include a recent building inspection report no older than three months in the Form 1 disclosure. The vendor, agent or auctioneer would be required to provide the Form 1 10 days prior to settlement and three days prior to an auction. This report must also be made available to prospective buyers within two days of request, ensuring timely access to important information.

I understand a similar scheme already exists in the ACT, where a building and a pest inspection report is required to be made available to a buyer before a property is offered for sale. By including a building inspection with the Form 1, all prospective buyers would have access to the same information, helping to level the playing field and ensuring that those trying to do their due diligence are not disadvantaged.

I acknowledge that some concerns have been raised about the potential conflict between the interests of buyers and sellers; however, this can be addressed through sensible regulations. By specifying the minimum standards and required information to be included in the building inspection reports, we can ensure consistency and transparency without placing undue burden on vendors.

I believe this is a sensible reform that will increase fairness and transparency and empower prospective buyers to make informed decisions about the most important investment of their lives—in most cases—and also go a small way towards reducing the cost of buying a home. With those remarks, I commend the bill to the chamber.

The Hon. R.A. SIMMS (16:21): I thank honourable members for their contributions. I did have a glimmer of hope when I saw the Hon. Russell Wortley rising to his feet rather than the usual suspect who is deployed to kill off my bills but, no, in this instance unfortunately the answer was still a no—very disappointing.

As has been articulated, I think very well by the Hon. Jing Lee, this is a really modest proposal. We are in the middle of the worst housing crisis we have seen for generations and more and more people are struggling to get into the housing market than ever before. In the ACT they have a very effective way of managing this question of building inspection reports where they require the seller of the property to commission a building inspection report, and that report is then provided as part of the Form 1 process.

The benefit of that, of course, is that the same information is available to every prospective buyer and you do not have a situation where a prospective buyer is disincentivised from taking out a building inspection report because they think the owner may not accept a conditional offer. You also ensure that all of the information is made available and it is less of a financial impost on the potential purchaser, particularly if one considers, as the Hon. Jing Lee identified, when you are looking at a home you may be required to put in multiple building inspection reports, and at $500 a pop that can be an additional cost that a prospective buyer does not want.

This is a pretty simple, straightforward, cost-of-living measure. It is disappointing to see that it is not being supported by the government or, I understand, the Liberal opposition, but I hope that people consider this idea again in the future.

The council divided on the second reading:

Ayes 4

Noes 13

Majority 9

AYES

NOES

Second reading thus negatived.