Greater transparency for people buying or selling property in Western Australia will be achieved with the introduction of new codes of conduct for real estate agents, sales representatives, settlement agents, and land valuers.

New codes of conduct

The new codes were developed following detailed consultation between Consumer Protection and the Real Estate & Construction industry, which included representatives from the Real Estate Institute of Western Australia, The Australian Institute of Conveyancers (WA), and the Australian Property Institute.  

The key areas of change include:

  • property sellers will be able to obtain a Real Estate Agent’s opinion with regard to market value in writing. accompanied by supporting evidence to justify their position
  • all offers must be communicated to the vendor, including verbal offers (the current system requires only those offers made in writing as per the current system to be communicated to the vendor)
  • settlement agents are barred from acting for both the buyer and the seller to decrease prejudice or perception of conflict of interest; and  
  • tighter time frames will be imposed for licensed valuers to act in accordance with the client’s reasonable instructions

Essentially, these new codes are modern and relevant and make it easier for industry members to understand and execute their duties and obligations to people buying or selling property in WA.   

Compulsory training has already started in relation to the proposed changes for these groups and the industry has two months from 5 October 2016 to fully comply. 

WA leads the way with project bank accounts

On 12 August 2016, the State Government announced that the Department of Finance will be adopting project bank accounts (PBAs) for the majority of its construction contracts tendered after 30 September 2016 with a construction value of more than over $1.5 million. The Department will look to expand the application of PBAs to other forms of contract in 2017.

In November 2013, the Department of Finance commenced Australia’s first trial of PBAs for selected Building Management and Works (BMW) construction projects. The trial included seven capital works projects across a range of different values and geographical locations throughout the State.

The trial is now complete, and has demonstrated the value that PBAs can offer in terms of improved certainty and timing of payment for subcontractors. This has a significant impact for contractors,, many of whom are small, local businesses.

PBAs are an alternative payment mechanism whereby ring-fenced bank accounts are established with the sole purpose to act as a channel for payment on construction projects to ensure that contractors, key subcontractors, and key members of the supply chain are paid on the contractually agreed dates.

The employer maintains adequate funds in the account to cover work in progress and other project commitments. Payments are made directly from the account to the contractor, key subcontractors and key suppliers in accordance with the payment arrangements agreed by those members of the project team who are party to the PBA.

PBAs have a number of benefits, including:

  • enabling subcontractors to better protect themselves in the event that a head contractor experiences financial difficulty (subject to certain conditions being met)
  • speeding up the payment process for parties lower down in the supply chain
  • increasing transparency and accountability in the payment process

It is important to note that PBAs do not seek to alter the existing contractual rights and responsibilities of the parties to a traditional construction contract.

Government retains Development Assessment Panels System

The State Government has announced that the retention of the Development Assessment Panel (DAP) system, albeit with some amendments designed to increase transparency and flexibility. Since 2011, DAPs have considered more than 1,000 applications worth over $30 billion in WA.

The amendments, based on recent feedback from key stakeholders including local governments as well as suggestions received through the 2015 State Parliamentary inquiry, include:

  • an option to opt-out of a DAP in favour of a local government for developments, such as industrial warehouses, that will not significantly impact local amenity
  • DAP agendas will be published at least seven days before a meeting instead of the current five days to provide greater advance notice to the public
  • local governments will be required to proactively contact each person who has provided a written submission in relation to a DAP application to inform them of when the meeting will take place
  • responsible authority reports need to include more information about why decisions can be made, to ensure that the decision-making process is clearly communicated and can be better understood
  • DAP presiding members will be able to intervene in the “stop-the-clock” process if parties disagree about the level of information that has been provided for an application
  • proponents will have the option to choose between a local government or a DAP when requesting an amendment to a minor aspect of an existing development approval
  • the Minister for Planning will be empowered to remove DAP members who do not undertake the appropriate DAP training
  • the maximum term of office for DAP members can be extended if a vacancy is waiting to be filled
  • changes to the DAP fee structure

The amendments are currently being drafted and will be implemented soon.

Next article: QLD update.