Property managers and the Australian Securities and Investments Commission (ASIC) are working together to develop a new law that will let them manage the flow of property transactions.
The law will be introduced by the next sitting of the Parliament in May, when the Coalition is in power, and will be made available to the public.
It will apply to companies who are required to manage property portfolios in the state and territories, but will apply only to those that have been granted a licence.
This will allow them to make a more informed choice of who can own a property and the value of a property, and to assess the risks involved in the sale and ownership of a particular property.
In the meantime, the ACCC will continue to monitor the situation and seek to prevent property owners from using their power to make decisions that could damage their own businesses.
Property managers and property investors will be able to make certain decisions about their properties on a case-by-case basis, and only if they have obtained the necessary licences from ASIC.
There are also new powers for property developers, including the ability to sell their properties for more than the market value, and a new definition of ‘in the public interest’.
Property investors will also be able “to set a maximum price for their properties” for “certain specified purposes”.
The changes are a significant shift in how Australian property investors are governed, with the ACCCs “primary duty” to protect the public and the economy from “serious threats” to their investments.
“Property is one of the most important sectors of our economy, and while it is still not regulated like a business it is now,” ASIC chief executive officer Peter Dutton said in a statement.
“This new law will help make sure that the public benefits from the success of Australia’s property market.”
It will give property investors greater control over what happens to their properties and provide better protection for investors against any negative outcomes from transactions.
“Under the proposed changes, property managers would be able, under the new rules, to make “reasonable” decisions about who they want to acquire a property for, based on what is in the public good, and the terms of the licence.
The ACCC would be empowered to issue “statutory” authorisations allowing property investors to acquire “any of the properties that are of the highest quality” and have a “commercial” or “commercial value”.
Under the previous laws, the ACT had no “business” or commercial value rules, meaning property managers could sell a property to a developer for as much as the value they paid for it, subject to certain conditions.
Under the new law, a “business”, which could be a “major corporation”, would need to obtain a “commissioned interest” and then the ACCP would need approval to acquire the property.
It would be up to the developers to determine what the value should be for their property.
Under current laws, “commercial values” are defined as “any property which has a commercial use or a significant part of the land, or which has been used for industrial purposes”.
This is because the value in an industrial property is determined by the market price of the finished product, which is usually a percentage of the retail price of it.
Property investors would have to apply to the ACCCA for the “commissions” and “interests” in their properties.
A property manager would be limited to the amount of commissions they are entitled to make for each “committed interest” they apply for, and they would only be allowed to acquire up to a maximum of five “commits”.
This limit would increase if a developer applied for a “conveyance licence”, which would give them the right to sell the property for more if the market prices were below their own bid price.
A “commit” was a “fraction” of the market bid price, which was determined by “the market price” for a property as a whole.
Under “conversions”, a property owner could “transfer” their property to another company, or transfer the property “on behalf” of another company to another person.
A person could also “convert” a property by selling the property to someone else and “converting” the property back to its original owner.
In general, a person could “conversion” a “contribution” to a company or property from the “contributory interest” to another, or “converted” a contribution to a property from “a contribution to the contributor’s contribution”.
Property managers would only have the power to “constrain” the market for a given property if they “convened” the company or company’s owner to sell it to another entity.
If a person “conceived” a company to be the “sole proprietor”, they would have the “exclusive right” to “consign” the shares to the sole proprietor