REIV Hypocrisy – Cut Stamp Duty While Commissions Increase
OPINION
by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd
The hypocrisy is astounding. Enzo Raimondo told the Herald Sun newspaper “If stamp duty rates are not reduced then anyone buying an average home will pay, as a percentage of the purchase price, a higher amount of stamp duty than they ever have before.” What Enzo chooses to ignore is that real estate agent commissions have doubled, and none of the benefits of advances in technology have been passed on to consumers. Surely, after gorging itself on ever-increasing commissions, the real estate industry should also be taking smaller portions from the plate.
In the Melbourne Herald-Sun newspaper (Monday 12 April, 2010), CEO of the Real Estate Institute of Victoria (REIV), Enzo Raimondo, made these observations:
“In 1999, the median price was $270,000 and stamp duty $11,860, or 4.4 per cent.” (At the same time, commission charged by a real estate agent on the sale is generally 3 per cent of the purchase price)
“The median house price across Melbourne is now $540,500 and the stamp duty is $24,400 – about 4.5 per cent of the purchase price.”(Similarly, the commission charged by a real estate agent on the sale remains around 3 per cent of the purchase price)
“If the stamp duty rates are not reduced then anyone buying an average home now will pay, as a percentage of the purchase price, a higher amount of stamp duty than they ever have before.”
According to reporter Matt Johnston, “The Real Estate Institute of Victoria wants the State Government to cut the tax level, as it did in 2006.”
The response of the government is that the GFC has affected government revenue. “The global financial crisis wiped over $220 million worth of stamp duty from our revenue in the first six months of this year alone”, said a spokesman for Treasurer John Lenders.
Commission as a tax charged by real estate agents
The commission charged by real estate agents on the sale of real estate is not related to the effort or overheads of the real estate agent. Commission is charged as a percentage of the sale/purchase price of the property. Effectively, commission is a tax, charged by real estate agents.
There is a difference, however, between the tax charged by the government on property sales, and the tax charged by real estate agents on property sales. One impost is channeled into the coffers of the government for the purposes of funding public works etc., while the other is channeled into the pockets of real estate agents.
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5 Comments
Fine to say that however how many real estate agents charge 3 percent these days? I think you will find it far less.
That makes it all the worse, as the agents who charge far less than 3% make it obvious that those who charge 3% are simply parasites.
My cousin recommended this blog and she was totally right keep up the fantastic work!
Stop talking about percentage and talk about the dollars.
Start talking about the over supply of Offices and new licensed agents who cant spell their names , or yours.
Raise the bar for entry as an agents rep.
ENFORCE vendors to provide an independent sworn valuation, Pest inspection and building inspection and make it a required part of the section 32 vendor statement provided by an entity that is at arms length from the selling agent or entity ,before an Authority can be given to an agent ( or Lawyers Conveyancing and its ilk. ) Penalty $20k.
Penalty for accepting an engagement without the above $20k.
Then maybe you have a real point to make in this industry .
Hi John,
Wouldn’t it be better to ditch the “nanny state”, stop protecting the charlatans who pretend to sell real estate, and require that anyone who engages in the legal transaction known as “the sale of real estate” is appropriately qualified to provide the legal advice and to perform the legal work that gives effect to what the vendor and purchaser are trying to achieve?