The NSW government is preparing to sell off the NSW land titles registry, the Land and Property Information (LPI) office, in a move dubbed by one economics commentator as “another dumb privatisation”.
Local and overseas banks, insurance companies and superannuation funds are said to be among potential buyers of the registry, which is expected to fetch more than $700 million.
Experts across the property sector and unions are appalled, saying the registry is world-class, efficient and consistently making a profit of $50 million a year.
Margaret Hole, a former president of the NSW Law Society, said privatisation could make title insurance a necessity for home buyers, as is common in the US. She said a home buyer would have to pay about $990 for title insurance on the purchase of a $1.4 million property.
“Last year, 213,000 transfers were lodged,” she said. “If title insurance is required, then, on a conservative estimate, $210 million would be raised by the successful operator, amounting to $744 billion over a period of 35 years [the length of the government contract].”
Compare $744 billion with the measly $700 million the state government is expecting to get for selling the titles office to big business!
The legislation to authorise the sale of the LPI was rushed through both houses of state parliament within 24 hours in late September, preventing public scrutiny and debate.
The NSW Public Service Association (PSA) has condemned the sale, noting that the state government currently guarantees that the registered owners recorded in the NSW land titles system are the true owners of their land and this guarantee is backed by Torrens Assurance Fund, which provides compensation for any loss suffered as a result of fraud or error in registration. If the service is privatised, the guarantee is lost and disputes over ownership of land or fraud are in the hands of a private company.
Currently, the state government’s Torrens Assurance Fund circumvents the need for land owners to self-insure and contributes to containing the cost of land transactions within the state. At the moment, this is a once-only payment that covers the owner's interests in a property for the life of the ownership. But if the state government no longer guarantees titles, consumers may need to take out title insurance, in addition to their home and contents insurance, every year.
The even worse news is that both the Victorian and South Australian Labor state governments are considering following the NSW Coalition government's bad example.
[The NSW Public Sector Association is circulating a petition against the privatisation of a series of state public sector entities.]