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

6 March 2024


Introduction and First Reading

The Hon. R.A. SIMMS (16:06): Obtained leave and introduced a bill for an act to amend the Land and Business (Sale and Conveyancing) Act 1994. Read a first time.

Second Reading

The Hon. R.A. SIMMS (16:06): I move:

That this bill be now read a second time.

The bill the Greens are introducing today is a simple proposition but one that will have a big impact on people who are looking to get into the housing market in our state. When you are buying a house, especially for the first time, you want to be assured about the quality of the property that you are buying. Homebuyers are not experts on defects in buildings and so one of the ways that they can have peace of mind is to order a building inspection. In South Australia, the responsibility for getting that building inspection resides with the purchaser, it is at their discretion.

Building inspections can cost between $400 to $800 for a small to medium-sized property, or up to $1,000 for a larger property and so, if you are shopping around and putting in offers on multiple properties, that can add up to a hefty sum for a prospective buyer. Some people choose to place an offer on a property subject to a building inspection, and those offers could be looked at less favourably by the vendor than offers that are not subject to any such condition.

Indeed, we have anecdotal evidence that that is the case in South Australia and that potential buyers are foregoing building inspections because they want to give themselves the best possible chance of their offer being accepted. This is particularly the case when we are in the middle of a once-in-a-generation housing crisis. The reality is that, in the housing market at the moment, the property owner holds all of the cards. If they are receiving multiple offers for their property then they are likely to accept the offer that is not subject to a building inspection.

It is a very different story over in the ACT. In the ACT, the vendor is responsible for providing the pre-purchase building inspection. This promotes equity by ensuring that all potential buyers are provided with exactly the same information and no-one is disadvantaged simply for doing their due diligence. At the moment in South Australia, I fear the property market runs on the principle of buyer beware. If you are unlucky enough to purchase a lemon, then you can be up for tens or potentially hundreds of thousands of dollars for rectifying a potential problem, and that is really not fair.

Knowing about potential building defects, such as cracking, rising damp or potential safety hazards, is really important for prospective homebuyers. Building inspections can prevent extra unexpected costs appearing further down the track. This Greens bill would ensure that potential buyers can request a building inspection, and this must be provided by the vendor or their representative within two days. This would ensure that this information is made available to a prospective buyer before they put an offer forward on a house, so they do so with their eyes open and with all the relevant information about the condition of a property.

Additionally, under this Greens bill, the building inspection would be included at the time the vendor's statement is served. We know this anecdotally as the Form 1. Under our bill, a vendor or the agent or auctioneer would be responsible for supplying the Form 1 at least 10 clear business days prior to settlement, including a current building inspection; that is, a building inspection that is no more than three months old. This information must be made available three business days prior to and at the auction.

The building inspection would also be supplied as part of any purchase. The buyer would then have time before the expiration of the cooling-off period to consider the building inspection report to make an informed decision, so if, when they receive that report, they become aware of defects and issues with the property they were not previously aware of, given that information is disclosed to the buyer during the cooling-off period, they can elect not to proceed with the sale. This change would ensure that buyers are given all the information relevant to their purchase.

Buying a home is the biggest purchase that most people will make in their lifetime. It is a significant investment that has huge implications for the life cycle, and we know that it takes most people up to 30 years or more to pay off a mortgage. So when you are making such a significant investment, it makes sense that you have all the relevant information at your fingertips. Why would we not ensure in South Australia that all potential buyers get access to this information at the point of sale so we can level the playing field for all and so that we can ensure that people make an informed purchase?

It is a simple reform, but it is one that I hope will enjoy support from across the parliament. I do intend to bring this to a vote in coming months and look forward to discussions with my parliamentary colleagues.