The Allan Labor Government has announced Australian-first reforms to tackle the persistent problem of underquoting in Victoria’s property market. These changes aim to make buying a home fairer and more transparent for thousands of Victorians frustrated by misleading price guides.

What is underquoting and why does it matter?

Underquoting occurs when a property is advertised at a price lower than the vendor’s actual reserve or expected selling price. While illegal, the practice remains widespread, leaving buyers spending time and money on inspections for homes they cannot afford. Consumer Affairs Victoria has received over 5,000 complaints since 2022, highlighting the scale of the issue. 

The key reform: mandatory reserve price disclosure

Under the proposed laws:

• Agents must publish the vendor’s actual reserve price at least seven days before an auction or fixed-date sale;
• Failure to disclose the reserve price within the timeframe means the property cannot proceed to auction or sale; and
• All marketing materials must be updated to reflect the reserve price, and outdated advertising must be withdrawn immediately.

These measures aim to close a loophole that allowed vendors to set or change reserves on auction day, often far above the advertised range. 

These changes also build on earlier updates to tighten rules around selecting comparable properties for price guides, ensuring buyers have a more accurate indication of a reasonable sale price ahead of auction day.

The Bill is expected to be introduced midway through next year.

Why is this significant?

Premier Jacinta Allan described the reform as a “nation-leading” step to make housing fairer, ensuring buyers know the true price before committing to inspections or bidding. Consumer Affairs Minister Nick Staikos said the change will give buyers confidence that the advertised price aligns with the vendor’s actual reserve price and reflects a fair indication of the property’s expected selling range.

Enforcement and penalties

The laws build on Victoria’s Underquoting Taskforce, which has already issued over 200 infringements totalling $2.3 million in fines. 

Currently, agents who underquote risk penalties of over $40,000 and potential loss of sales commissions under Victoria’s estate agent laws, and penalties of up to $50 million for companies and $2.5 million for individuals under Australian Consumer Law.

Agents who breach the new rules will face strict penalties and be barred from conducting auctions or sales until compliant.

What about off-the-plan and volume sales?

While the underquoting reforms are a major step forward for established property sales, it’s important to note that these proposed new rules are unlikely to apply to off-the-plan or volume sales. However, that does not mean these transactions are free from regulation. There is still a significant overlay of consumer protection law, particularly around misleading or deceptive conduct and misrepresentation. Developers and agents must ensure marketing materials and representations about pricing, inclusions, and completion dates are accurate and not likely to mislead buyers. 

Our team has written extensively on these issues across previously published articles, please see here.