Greater regulation of real estate investments, particularly in SMSFs, is inevitable, with specialist licensing measures likely to be introduced for those providing property advice, according to a property director.
“SMSFs are a big part of what advisers do now and I think there will be some regulation somewhere along the line, and there needs to be, where property investment advice will be through someone licensed,” Nyko Property director Bill Nikolouzakis told selfmanagedsuper.
“There will come a point, like there was in finance broking, where somebody like ASIC (Australian Securities and Investments Commission) will take over the regulation of this space because I just can’t see anyone but a financial adviser or accountant being the right person to give that advice.
“It will be good for the industry, just like it was for the broking industry, and there will be benefits especially for the advisers.”
From a holistic standpoint, property investments were the same as any other product, Nikolouzakis said.
“There are similar issues that come up in property – there’s a plan you need to put in place, there are certain characteristics it has to meet, depending on whether you’re close to retirement, et cetera,” he said.
“Right now, that advice is being given by, generally, estate agents, but sometimes they aren’t even estate agents, who have a specific property that they’re trying to sell, so that’s product selling; they’re not giving them real property advice.
“There’s a big gap there at the moment – one in seven Australians have a property, but only one in 20 buy again, so they’re obviously not making the right decisions and buying the right property.”
Property spruiking was less of an issue than it was five years ago, however, it was still an issue, especially for SMSFs, he said.
“There’s a difference between selling an SMSF property and people recommending properties that are SMSF-qualified, which of course, there’s no such thing,” he said.
In the past year, about 75 per cent of Nyko’s business was conducted through financial services intermediaries, which included financial advisers, accountants and mortgage-type brokers.
