Over the years, our team has assisted a number of people who have been adversely affected by failed vendor finance and rent-to-buy deals, which are promoted as an opportunity to achieve home ownership for those who can’t afford it, but ultimately turn the ‘great Australian dream’ of homeownership into a nightmare. Consumer Action has seen no successful examples of these arrangements.
In our submission we welcome the implementation of the Sale of Land Amendment Act, as this ban on certain residential vendor terms and rent-to-buy agreements will ensure vulnerable home purchasers will be better protected from unfair exploitation in Victoria.
We think that properties in Victoria that have a sale price of up to $900,000, subject to indexation, should be subject to the ban on vendor terms, as property values are often inflated in term contract arrangements. We are proposing that the sale price threshold is increased as this will ensure that more exploitative term contract arrangements are captured by the Amendment Act. Setting this threshold too low, would allow these dodgy deals to continue to occur and would still drive significant harm and consumer detriment in Victoria.
We consider exempting a class of persons from the new rent-to-buy prohibitions may invite exploitation and instead exemptions should be determined on an individual-by-individual basis, subject to approval by the Director of Consumer Affairs Victoria.