Rogue practices in spotlight
Labour demands official inquiry into predatory methods in real estate.
Labour has called for a Parliamentary-level inquiry into alleged “predatory practices” in the real estate industry. Consumer Affairs spokesman Michael Wood has written to Parliament’s Commerce Select Committee requesting a full investigation “into the scope of predatory practices in the property investment sector” amid claims some home-sellers are being left out of pocket.
It comes the back revelations yesterday’s Weekend Herald that a private “no commission” house-buying company had been referred to the Commerce Commission and Real Estate Agents Authority (REAA).
Peter Lee’s Propertywise Ltd is accused of taking advantage of a disabled woman with a traumatic brain injury to buy her West Auckland home well below market value, and of altering the sale contract.
Pamela Baucke, 61, sold her house for $515,000 without receiving a valuation or legal advice when Lee visited her May.
Estimates viewed by the Weekend Herald put the property’s actual value at between $630,000 and $765,000. on of in
Lee has denied acting unethically or illegally, and said his company obtained its own valuation for $580,000, so the sale price was “reasonable”. It is the second such case to emerge involving Lee.
Wood’s inquiry plea follows a story in May, which revealed property investors were being coached by investment guru Ron Hoy Fong to target vulnerable homeowners facing death, divorce or financial hardship.
The Commerce Commission has since launched an investigation into Fong. He has denied acting unethically or targeting vulnerable people.
While the REAA policed licensed realty agents, there appeared to be no agency working proactively to investigate the investor market and weed out rogue operators who were exploiting homeowners in private transactions, Wood said.
“So a Parliamentary inquiry, which has quite strong inquisitorial powers, is the best way I can think of, of getting an official spotlight on the sector.”
He made his request to the committee last week.
“Such practices came to light recently when a video of property investor and ‘coach’ Ron Hoy Fong emerged, which showed him training other investors to engage in practices such as:
● Targeting vulnerable people such as those who have recently suffered a bereavement
●‘Hunting in packs’, whereby investors collude to maximise profit
● Placing fake low bids in order to make below market offers appear to be more attractive
● Using false names in the bidding process.”
Wood said such practices undermined people’s confidence in the real estate market, and may breach the Fair Trading Act. A full parliamentary inquiry was appropriate and necessary to understand whether such behaviour was more widespread.
“I am sure that members of the committee across party lines will be dismayed by the predatory behaviour displayed in Ron Hoy Fong’s material and will want to clearly understand whether this is isolated or more widespread.”
Meanwhile, Consumer New Zealand has scoffed at suggestions it promotes private house-buying companies like Lee’s.
In an email to Baucke, Lee boasted about his company’s impeccable reputation and said Consumer Magazine found people got a “better price and have a better experience” when selling privately.
However, Consumer NZ chief Sue Chetwin told the Herald on Sunday her organisation would “never endorse him or his methods”.