Costly pre-purchase building, pest inspection and strata reports are an imperative when buying property, but laws now operational across NSW might make them cheaper from a collaborative approach.
It’s a timely initiative by the Minister for Innovation and Better Regulation Victor Dominello who has come up with a system that should see savings for intending home buyers.
With Sydney auction clearance rates at around 80 percent, there will still be plenty of disappointed, and out of pocket, buyers this spring.
But rather than bear the cost yourself, the system encourages a sharing among competing buyers. Building and pest inspection reports can cost anywhere from $200 to $600 each.
When any prospective buyer requests a contract of sale for the residential property, the estate agent will now need to inform the buyer about any pre-purchase reports that have been undertaken by other potential buyers.
Home buyers may then opt to access an already available report, and negotiate a reduced cost with the inspection company, instead of commissioning their own full priced report.
Qualified inspectors are important because they look beyond cosmetic repairs or improvements, and identify unsafe renovations and repairs, thus minimising the issues of unforeseen costs.
Prior to the August 15 amendments, Dominello met with participants from the NSW property industry. It had been an issue for around three decades, especially as the city’s embrace of auctions rather than private treaty meant 10,000s of unsuccessful bidders were left with binned inspection reports.
It was raised with vigour under the State Labor Government in 2010, by the founder of Aussie Home Loans, mortgage broker John Symond who described the longstanding practice of buyer inspection reports as “antiquated, cumbersome and expensive”.
“It imposes a serious cost to the consumer in circumstances where there’s no guarantee they’ll get the property anyway,” he noted.
Since 2004, vendors in the Australian Capital Territory have been required to provide pre-purchase reports to potential purchasers. Upon completion of the contract, the purchaser reimburses the vendor for the cost of the reports.
The NSW Government toyed with vendors providing one report, but there were always conflict of interest, disclosure and liability concerns. There was always the concern the inspection reports provided by vendors may not rigorous enough especially if the vendor’s mate was the building inspector.