Property regulation laws ‘archaic’

Linden Toll

The Australian Direct Property Investment Association (ADPIA) has called for a relaxation and synchronisation of Australia’s stamp duty and property trust laws.

The laws, which are controlled by the respective Offices of State Revenue, vary across the country.

ADPIA president Linden Toll said a review and updating of current laws was well overdue because of the strong growth in the direct property industry over recent years.

“Many of the laws could now be considered archaic as they were drafted when a vastly different commercial property investment market existed in this country,” he said.

ADPIA has identified a number of issues that it believes should be addressed including land rich trust rules, the different treatment of ASX listed property trusts and non-ASX listed trusts, the differences between the states’ definitions of ‘widely-held’ tests and the adoption of look-through tests to establish the number of individual investors represented by property fund managers.

If a new property fund is being launched that has properties in different states and is not listed on the Australian Stock Exchange, it must deal with different laws in each state as well as paying stamp duty taxes, the ADPIA release said.

If the ADPIA recommendations are adopted, state laws would be synchronised and stamp duty exemptions made available to all property funds that are registered as managed investment schemes.

“ADPIA believes that harmonising these rules will … produce stronger returns for the more than 250,000 individual investors [in the direct property investment] industry,” said Toll.

According to ADPIA’s figures, the unlisted property trust industry grew 1,096 per cent between December of 1998 and December of 2007.