Home buyers hurt by ECV delays

Chris Merritt | February 15, 2008 | The Australian

THE Victorian Government has forced the state's home buyers to pay hundreds of thousands of dollars in extra government fees because disputes have hobbled its $40 million electronic conveyancing system.

Home buyers have been paying extra charges since November because the Government has been unable to settle disputes affecting its relatively cheap electronic conveyancing system (ECV).

As a result, thousands of people who have bought and sold property since November have had no alternative but to use the old paper-based conveyancing system that has been hit by government fee increases of up to 32 per cent.

The Government imposed those increases in November to encourage a quick take-up of the electronic system. But it has refused to remove the fee increases despite its inability to resolve disputes with key players in the conveyancing industry that have limited the take-up of the new system.

Those disputes, which have been dragging on since last year, have led to a boycott of ECV by the major banks and most of the state's solicitors.

But they have also led to a windfall in conveyancing fee income for the state Government from the old paper-based system.

The Australian Institute of Conveyancers said the Government had been receiving about $20 more for each document filed under the old system than it would have received under ECV.

"There would be thousands of these documents filed each week," said Australian Institute of Conveyancers Victorian chief executive Jill Ludwell.

The blow-out in conveyancing fees has alienated the remaining key players in the conveyancing industry who were not already at odds with the state Government over ECV.

The Australian Institute of Conveyancers, the Law Institute of Victoria and the Victorian arm of the Master Builders Association all called this week for the fee increases on paper-based conveyancing to be abandoned.

The other key players in conveyancing -- the major banks -- were already involved in one of the two disputes with the Government that are affecting ECV.

The big banks withdrew their support from ECV last year until they were satisfied that Victoria was committed to establishing a single national system of electronic conveyancing instead of a series of state-based systems.

In November the Victorian minister responsible for ECV, Gavin Jennings, was a key player in the establishment of a high-powered committee of state government officials aimed at working towards a national e-conveyancing system.

The other dispute affecting ECV involves the Legal Practitioners Liability Committee, the organisation that provides professional indemnity insurance for Victoria's solicitors.

The committee had not been consulted about ECV until relatively late in the system's development. The Government has not yet been able to ease the committee's concerns about the potential liability of solicitors who take part in the system.

Without the committee's sign-off, the Law Institute of Victoria has been unable to recommend that solicitors take part in the system. However, the Rudd Government has now intervened in the dispute and is attempting to broker a solution that could address the concerns of the big banks (see accompanying report).

The state opposition has also taken an interest in the affair.

Shadow Attorney-General Robert Clark said that if the problems afflicting ECV could not be resolved by government officials, Attorney-General Rob Hulls needed to take a direct role in talks with the banks and the Law Institute. "This needs to be thrashed out. You cannot have a system introduced by the Government that these key and respected organisations believe is unsatisfactory," Mr Clark said.

"Until the new system is up and running, the consumer is paying through the nose for the old paper-based system," he said.

He endorsed the call from the conveyancing industry for the fee increases to be wound back.

Before unveiling the latest stage of ECV in November, the Government promised it would result in cost savings on property transactions of up to $395.

However, the Australian Institute of Conveyancers said the net impact of ECV and its associated disputes had increased the cost of conveyancing and hurt the public. "The public is being penalised because the electronic system in Victoria cannot get up and running," said the AIC's Jill Ludwell.

Body: She said the fee increases for paper-based conveyancing would have caused far less disruption had they been introduced once ECV was being widely used. "The industry is fed up with all the bickering," Ms Ludwell said.

Figures assembled by the Master Builders Association show the cost of filing a traditional property transfer, after a sale, rose by 16 per cent in November. Government fees on other paper-based documents rose by between 20.2 and 32 per cent.

The Law Institute warned the Government on November 1 that ECV, at least in its early stages, was unlikely to be widely used. LIV chief executive Michael Brett Young wrote to Land Victoria saying the fee hikes were being introduced even before the latest stage of ECV was due to be launched on November 16. He urged Land Victoria not to introduce the new fees until there was wider participation in ECV.

"It is an unjust financial imposition upon the end-users of Land Victoria's registration system to bear additional costs associated with paper-based transactions," Mr Brett Young wrote.

On September 3, the Master Builders had sent Land Victoria a similar warning. Executive director Brian Welch wrote that the state Government's over-reliance on building industry taxes was undermining housing affordability, discouraging investment and reducing employment opportunities. "Taxes and charges on the building industry add 30 per cent to the cost of a new house and land, with 53 per cent of these taxes going directly to the state Government," Mr Welch wrote.

Mr Welch told The Australian that ECV was a good idea that had been spoiled by bad execution. "What we need is a transition and I suspect that was never considered," he said.

Mr Brett Young said electronic conveyancing was a worthwhile initiative but to work there needed to be one system across the nation. He said the best way to ensure a quick take-up of ECV would be to greatly reduce the cost of online filing while returning the fee scale for paper-based conveyancing to its original level.

He believed a benefit of having Labor governments in office in Canberra and the states was that it increased the likelihood of achieving a national approach to electronic conveyancing.

A spokesman for Victorian Environment Minister Gavin Jennings said the state's electronic conveyancing system had become "fully operational" late last year.

"The electronic conveyancing system will provide savings of up to $395 per for party settlement, and more than $70 million of annual savings to Victorian industry and the community by 2012," the spokesman said. "We are continuing to work with our industry partners and commonwealth, states and territory colleagues toward the development of a national EC system."