Victoria's Real Estate Reform Storm with Toby Balazs

Peter Schravemade (00:05) G'day folks, my name is Peter Schravemade. This is another Quick Bite, a side issue of Before the Weekend, which is our podcast that we like to release, obviously, before the weekend, before everything kicks in and all the crazy starts.

Today I'm joined by the effervescent Mr Toby Balazs, all the way from the Real Estate Institute of Victoria. He is, in fact, the CEO down there in the hot seat.

Toby, welcome to Before the Weekend, and thank you for giving me some of your time this morning.

Toby Balazs (00:31) No problem at all. Thanks very much for having me, Peter. Looking forward to it.

Peter Schravemade (00:35) Yeah. Now look, I've caught up with you in a few capacities since you started in the role in November 2025, I think is when you kicked off.

Are you sitting there at this stage going, "What the hell did I sign up for?" Or are you just chipping away slowly at this?

Because from my perspective, it seems like as soon as you stepped into the role, your State Government has gone, "You know what? We're going to make this job harder for him."

How are you feeling? Where are you at?

Toby Balazs (01:04) Well, hopefully that's correlation, not causation, Peter. Hopefully I haven't made things worse for the Victorian property sector.

You're spot on. I started on November 10, and I think within seven days they gave me a surprise announcement that they were forging ahead with the disclosure of auction reserve prices seven days prior to auction.

So that was a surprise, and that was straight into it.

Since then, there has been a lot of regulatory change that has been spoken about and planned. Of course, we've now just got the Consumer Amendment Bill that has come through.

Myself and our policy team have been doing a lot of work to try and highlight to the Government a couple of things: how unworkable some of the proposed solutions are, but really, how unfair some of them are as well.

Depending on time and depending on where we go, Pete, I'm happy to talk you through our perspective on those.

But yeah, it has certainly been a big seven months. Plenty to do. I'm thoroughly enjoying the job. I absolutely love it. But there is lots of stuff that we're trying to do to make it a more equitable and fairer property market.

We're up against it at the moment with regard to some of the legislation that's coming down the pipe, and we're just trying to put some balance into it as we see it.

Peter Schravemade (02:25) Yeah, look, I'm finding it quite unbelievable.

I've seen this happen in other states. It did happen here under the previous Labor Government before the LNP got in recently. It was almost every week, and the way they were bringing it in was almost unconscionable. These things were being rushed through Parliament at the last hour. The REIQ weren't getting a good look at it.

So it feels a little bit like deja vu, but I've got to say, some of the ones that are coming across your desk almost seem mad from a guy who looks at it from a national perspective.

I travel quite a bit, so I see quite a lot of what's going on in the other states. There are just some that I cannot fathom.

There's one recently where I believe tenants are able to break lease, or there's something along those lines. Is that correct?

Toby Balazs (03:20) Yeah. In terms of the RTA change, the Residential Tenancies Act here in Victoria, we've had over 150 changes in the last five years.

I mean, that's just sheer change fatigue, right?

Peter Schravemade (03:40) For property managers who are already under the pump.

Toby Balazs (03:43) Exactly. What a tough job. They're under the pump. They're the meat in the sandwich, really, between the tenant and the landlord.

The reality is that the vast majority of landlords and tenants are good and work in a positive, or symbiotic, sort of relationship where they work well together. There are always those at the fringes and at the outer ends, a bad tenant or a bad landlord. That does occur.

But what we're seeing now in Victoria is that we've got a Minister for Renters, so a dedicated Minister just for renters. Whilst we 100 per cent support tenant rights and making sure there are measures in place so that the housing landlords are providing, or residential rental providers are providing, is safe, secure and up to standard, unfortunately what we're seeing is an imbalance in terms of the rights renters have, without really understanding the knock-on effects of what that means with regard to supply.

It impacts landlords wanting to continue to hold those properties and put them into the rental pool, to ensure that vacancy rates are at a level that is sustainable and that pricing is better.

I'd be happy to share this with you after this, Peter. I know we're in a podcast environment, so I can't show you the exact specifics, but I'll send it through to you.

We've done some analysis with regard to the changes that have been made. As I said, there have been over 150 changes made to the Residential Tenancies Act. We've taken a full decade-long view of the rental market here in Victoria. We've weighted it for inflationary changes and cost of living.

Unfortunately, we are now in a poorer situation than we were 10 years ago, even with all these changes. The vacancy rate is lower. The cost to rent is higher. Choice is lower as well.

So while all this stuff has come down the pipe, and there is a lot of stuff around renters being able to break leases, it doesn't mean we're in a position where we have a better rental market.

That's really the challenge. We need to ensure landlords are incentivised. I know this is a long answer, mate, so I'm getting there, but certainly not disincentivised to hold properties in Victoria and provide to the rental pool.

That's exactly what we're seeing at the moment.

Peter Schravemade (06:09) The way I feel is that your State Government is, and you probably can't agree with this because you have to lobby these guys, but from my perspective, it seems as though they're trying to win votes from tenants by driving a wedge between the landlord and the tenant.

They're saying, "We're on your side."

I've never seen a State Government legislate that a contract between a landlord and tenant can be broken. To me, that seems mad. It's not even common sense.

I'm assuming they didn't ask you about it beforehand. It is almost bordering on a society where the Government is just making up the rules as it goes along. We've seen that.

It's strange that it's a concentrated attack in the real estate area because I haven't even gotten to things like auction reserve prices yet, which is another sign of madness.

From your perspective, you're saying to me that these changes haven't improved the plight of the tenant. They definitely haven't improved the plight of the investor. Why are these laws coming in? Why do you think?

Toby Balazs (07:35) Unfortunately, it is a very one-sided view of how a housing market works, and it's all on the demand side.

Renters should have their rights protected. Absolutely no problem with that. We support a fair and balanced market.

When you've got all the changes coming down on the demand side, and the inability for property investors and landlords to ensure that their investment is in a balanced market, that's the challenge.

What we've actually got now is a situation where landlords, unfortunately, are exiting the market. That means there is less supply, and things are going to be tighter in a rental market that is already so tight and where there is already so much price pressure.

It is very frustrating. What we want to see is a balanced market.

The other thing to really note and make mention of is this view that the wealthy landlord with endless amounts of money is just profiteering off tenants who are in a less fortunate position than them.

Peter Schravemade (08:59) Yeah, I've heard this quite a lot in every state, to be honest.

Toby Balazs (09:03) The vast majority of landlords, or private rental providers, which is supported by ABS data, are, for want of a better term, mum and dad investors who have one investment property.

What they're doing is looking at it and saying, "Okay, we need to build for the future and look after ourselves." So they've got an investment property.

Why should they be demonised? Why should it be that a person with a rental property is in a position where we need to get all the legislation on the demand side and not think about supply?

Look at what's happening. Vacancy rates are getting tighter. Cost pressures are going up. Choice is less.

To us, it doesn't make sense. A market needs balance.

Peter Schravemade (09:44) Yeah, and we're also against a backdrop where we've had a particularly unpopular Budget just drop, which hasn't helped the scenario at all.

Lots of people, we were speaking about that on the podcast today, have their hands in their pockets. They're not doing anything from a seller or buyer perspective, which is not helping the market.

We've had capital gains changes grandfathered, so if anyone was going to sell and a tenant was going to get in, they're probably better off waiting to see if there's another government coming in two years that's going to repeal all of this.

So there's that. There's the fact that we are in a really bad supply market, where we're not getting the houses built that we need in order to release that pressure on the market.

And then all of a sudden, your State Government decides it might be time to come in and start throwing stones at mum and dad investors.

I grant that there must be institutional investors in the state, but I actually don't think that any of this is going to impact them in a way that is meaningful to the market.

I guess that's what you're saying in the study that you've done.

Toby Balazs (10:58) Yeah, absolutely.

You've got institutional investors coming in from a build-to-rent perspective who look at it and say, "Okay, we're going to do whole developments that are there to provide..."

Peter Schravemade (11:09) Aimed at housing affordability. Great.

Toby Balazs (11:12) Exactly.

What we are supporting, or promoting, is that the same incentives that exist for the larger build-to-rent providers should apply to smaller developments and smaller parcels of land. There should be incentives for build-to-rent.

The Government talks about lifelong renters, or that there is going to be a shift in terms of more lifelong renters, people who are going to be in that home for a long period of time.

Absolutely fine. Incentivise the people providing the supply to be able to do that and sign long-term leases. It's good for the tenant and it's good for the private rental provider. That's balance.

Unfortunately, it's all going one way. What we're going to see, I think, is less and less supply in the market from rental properties, and that's just going to make things worse.

They don't really want to engage or talk about supply-side measures. I understand they are a longer-term view and possibly a more difficult measure to deliver, but we do need to start doing it.

To your point, Pete, we just do not deliver anywhere near enough supply. That should include incentives for private supply, but there is no reason why there shouldn't be more social housing as well.

Peter Schravemade (12:26) Yep. I've got a block of land. I can build on it. I can afford to build on it. It's going to cost me a million dollars to put a basic house onto the block of land.

The price that I will get if I do that won't cover that cost. There's no incentive, and I would be one of your mum and dad investors looking at it.

So I can only imagine that's compounded all the way along.

Then, let's throw some more fuel on the fire. I was about to purchase a property for investment in my self-managed super fund, and that got kiboshed with the Greens in the Senate the other day.

So whichever way I go, I'm screwed. I don't have a horse in the race, nor can I. Most of the property buyers' agents out there are telling me to look at commercial. But again, that's not solving for the basic shelter issue, which is supply and demand.

Toby Balazs (13:17) You've got a real supply issue, as you've made, and there are all these demand-side legislative changes that really do nothing.

Not only do they not incentivise, they disincentivise, exactly in that example you just mentioned, Pete.

It is a worry. We want more supply. We don't want people to feel housing pressure. But if you don't address the supply side, it's going to keep getting worse.

Peter Schravemade (13:41) Well, let's move from some of that landlord versus tenant legislation that comes in. I hate the fact that I have to say that, but that's what it feels like.

Let's move from that and go over to the other one that didn't make sense to me. I don't think it made sense to you. A lot of the auctioneers are up in arms about it in Victoria, which is forcing auction reserve prices to be published before an auction.

Do they understand what a reserve price is and the function that it plays in the auction? Do you think? Do you reckon they know that?

Toby Balazs (14:15) I think no. The short answer is no. They don't really understand how a reserve works.

Peter Schravemade (14:20) How that works, why you have it there and why it leverages the actual sale. They just missed that, I think.

Toby Balazs (14:30) There are a number of things on this, Pete, that are nonsensical, to put it bluntly.

Firstly, if you remove a vendor's ability to manage the price, and the flexibility that goes with that price, for what is, for most people, their largest asset, they'll move to other methods of sale.

The agent will talk to them and say, "Well, we've got to do this. It's going to become potentially problematic."

So you incentivise people to move away from auction.

What is the most transparent form of sale? Do you want to see who your competition is? Do you want to know when it gets called exactly on the market? Do you want to be able to see it out on the street and know exactly how the competitive process works?

That's auction.

Peter Schravemade (15:04) Yeah.

But it's not even just that. At the moment, we are pointing to auction clearance rates and discerning the state of the market from there.

It's a shining light in the Australian real estate economy, the fact that we have a finger on the pulse instantly of what is happening that weekend.

It may not give a perfect view of the market because there are other ways that property is transacted, but it's a really good litmus test as to what's going on at the moment.

It just seems crazy.

Toby Balazs (15:46) Exactly. It is that barometer as to where the market is.

The thing as well is that on auction day, and we've got some stats that show reserve prices go down. Reserve prices are a dynamic piece that the vendor owns as they bring their property to market.

The way in which this legislation has been pitched, or spoken about, is for two things. One is to address underquoting. I'll get to that in a moment. The other is affordability.

Declaring an auction reserve will do nothing for affordability. Let's just call it what it is. That's a furphy.

In terms of underquoting, we know that underquoting has been an issue. The Real Estate Institute of Victoria last year convened a very impressive group of people in our strategic working group, which had CEOs of large groups, regional representation and buyers' agents. We invited the Government to be a part of that.

That was a genuine piece of work to say, "We know we need to address this and work together and put together some solutions that are going to be workable."

I know we're biased because it was our recommendation, but the recommendation we put forward makes sense to everyone we speak to.

What that is, is that the vendor's reserve must fit within the 10 per cent advertised range.

So if I'm taking my property to market and the advertised range is $900,000 to $990,000, that's fine. That gives the buyer enough confidence to know, "Okay, it's going to be called on the market in that range."

It also gives the vendor enough flexibility on auction day to manage their reserve to reflect what's happening in the market.

Things change daily. The whole point of bringing a property to market via auction is typically because there is price variance and you need to test the market and understand what's going to happen.

What we're proposing is that three days before the auction, the vendor confirms with their agent that their reserve exists within the advertised range.

If that's changed, and I've been advertising $900,000 to $990,000, but for whatever reason I go, "No, actually, I think my property is worth $1.05 million now," no problem. The range then gets changed to $1 million to $1.1 million.

That's fair and equitable, so the buyers know exactly what is going to be required from a borrowing capacity within a range, and the vendor can respond flexibly to what happens on auction day.

This declaring of an auction reserve price seven days out means people will choose other methods of sale.

The other thing is the way the Bill is worded at the moment, Pete, is so ambiguous.

What happens if there is an auction coming up on Saturday, and on Tuesday I know that, as an agent, there are, let's say, three buyers who I think are interested in that property. If I'm one of the buyers and I put forward an offer just above the reserve or at the reserve, as the agent, I need to do the right thing by my vendor and the prospective buyers.

I need to go back out to those other two buyers and say, "Hey, we've got an offer at this level. Would you like to put in another offer?"

What happens then? Does that mean the seven days resets?

What happens if I call them into the office to say we're going to do a boardroom auction? Am I now in breach of the seven-day rule?

By the way, if I am in breach of that rule, the fines are now up to almost $50,000 for the agent.

Peter Schravemade (19:07) It doesn't feel like they thought about that.

What are they doing?

Toby Balazs (19:20) So as the agent, I've got to do the right thing by my vendor and maximise the price. That is my job.

I've also got to give buyers the opportunity to respond if offers come through. You can either do that at auction, or I can ask them, "Would you like to put in an offer? We've got some offers before auction."

If they choose not to, that's fine. But under this current rule, do I then need to have the seven days reset?

So now I'm saying, "Come into the office on Wednesday." Do I now need to advertise and change to say we're going to do a boardroom auction in seven days' time, the following Wednesday?

There are just so many things about the proposed legislation that don't work, and that are going to encourage people to go down other methods that get pushed behind closed doors, which buyers don't like.

Peter Schravemade (20:03) Yeah, mate. It just sounds to me like policy on the run, to be honest.

The very fact that you haven't been consulted about it is ridiculous, in my opinion. When you start getting any kind of State Government, any kind of government at all, that stops discussing or talking with its constituents, especially the specialists in the industry area we're talking about, it makes it very, very difficult.

I'm conscious we've only got nine minutes left.

Toby Balazs (20:29) I have gone on some long rants there.

Peter Schravemade (20:31) No, no, that's okay.

From your perspective, I think you're doing a fantastic job. I'm watching exactly how you're lobbying and you're getting enough attention out there.

But if you're a property professional in Victoria, how can they assist you in lobbying the Government? Do they write to their local member? What is the plan of attack from the industry perspective in Victoria to try and push back on this?

Toby Balazs (20:59) Great question. Thank you, mate.

We've put together our response to the proposed Bill that says, "Here's why it's problematic, and here are all the issues in there."

It's a big Bill, and it touches, I think, all seven of the Acts that we cover. From a residential point of view in particular, the Sale of Land Act, the Estate Agents Act, there's stuff there that we've put forward.

We've sent a copy of that to every single MP and said, "This is an issue."

We've sent it out to our membership base with both our proposed response to the Bill, as well as a templated letter that they can write, not only to their MP, but to the opposition as well.

We want to make sure that every member of the REIV, every homeowner who is concerned about having their rights taken away, and every buyer who thinks, "Well, the benefit of buying at auction is I can see my competition," writes to their local MP.

Email, write, whatever the case may be, to say this is not going to work for the Victorian property sector. It's going to make the Victorian property sector worse.

So if they can get behind that, I encourage everyone to take that templated letter, adjust it or amend it as you see fit, and write to every single MP, every single opposition candidate in your area, and let them know that you're not happy with it.

Peter Schravemade (22:24) Yeah. And that probably extends to landlords as well.

Toby Balazs (22:28) One hundred per cent for landlords as well.

Landlords should be able to take a similar stance and say the way in which it's working, and we get regular communication from individual landlords, even though we're the peak body that obviously looks after real estate agents.

Individual landlords are writing to us with measured, reasonable concerns as to what's happening with their property and their investment.

They're happy to support minimum standards. For the vast majority of them, they want to deliver quality housing to tenants.

But this demonisation of private rental providers or landlords is not helpful at all, and it's going to be a worse environment for renters. It really will mean that prices will go up and choice will be less.

Peter Schravemade (23:17) Yeah. I think we're already seeing that.

I know there's been a lot of noise about prices coming back in the market, which I think is a natural correction anyway. We've seen a lot of that, particularly in the CBD area. Apartments are a bit on the nose at the moment, and they've come back some way.

But in all the other states, we've seen market correction just because we are so unaffordable across the bandwidth of the nation.

The other thing I want to throw out there to the listeners is, if you're not a member of the REIV, this is exactly where the industry needs to stand together.

I know your advocacy and your lobbying of the Government may seem futile sometimes, but this is exactly where you need an REIV in the conversation, having the conversation.

Between you and Jake, congratulations on that.

If you are not a member of the REIV, you should be listening to this going, "These guys are lobbying not just for the members that are there, but for the sake of the industry out there."

I would encourage you to get along and figure out what's going on with your REIV. Membership is probably where I would represent you to go because we're better together.

When the Government starts leveraging against the industry, or against the private landlord force, we actually need to get in and we need to have a voice.

So I really appreciate the job that you're doing there.

The final question I've got for you is: are we waiting for a change of government?

Toby Balazs (24:50) Nothing.

Look...

Peter Schravemade (25:04) I know you have to work with them, even if they get back in.

Toby Balazs (25:09) Sure. The challenge with all of that is that the legislation is on the table, and some of the key changes are scheduled for October 1. Our election is at the end of November.

Be that as it may, whichever side of politics is governing at the time, if we remove that, it's about the policies that have been presented and then get put into practice.

That is our concern. At the moment, it is obviously the current Government that is legislating for these changes.

We need to make sure they understand the unintended consequences of what they're putting forward.

I know we're conscious of time, but just one last thing I wanted to say.

This is really a strong example of a solution looking for a problem, from our point of view.

Section 27 has now been removed under this current proposed Bill.

Section 27 enables a vendor to get early access to deposit funds from the buyer so they can make their next move and fund their next property purchase.

They've now removed Section 27 as a whole.

Section 27 is also a way in which agents can get early access to their commission, which is, in our opinion, fair and reasonable because they've done the work.

If it's a 90 or 120-day settlement, they're waiting all this time even though they've delivered the service. They have no impact on settlement after the contract of sale is signed.

By removing Section 27, it says to the industry, "We're not interested in you and your cash flow issues, or being able to manage the revenue that you have coming in for the services you've already delivered."

That's one thing.

From a homeowner point of view, by removing this and saying we no longer have Section 27, you have to put the condition in the Section 32 to say, "I want early access to those funds when the property gets sold."

But the buyer does not even know who the vendor is. They don't know the detail of this.

Section 27 is a really reasonable way, post-sale, to then say, "Yes, buyer and seller are happy to trade on this basis."

By putting it in the contract right up front, it again shows a misunderstanding as to how a property transaction process reasonably takes place.

Does that mean vendors are less likely to be able to access that deposit money? So the cost of them moving, bridging finance and all those sorts of things come into play more often.

Again, that's not fair and that's not good for homeowners.

Peter Schravemade (27:41) No, it's not at all. It's just one more barrier for the people who are in that area.

Of course, we've had AML come in. We're days away from reporting.

Is there any other train smash happening down in Victoria that we need to discuss at this point, Toby?

Toby Balazs (28:05) How long have we got?

No, mate. Look, AML is one of those things that we've done a lot of preparation with the industry on.

I know there is some frustration around the need for real estate agents to have to play this role on both buyer and seller. It is what it is. It's happening July 1, so we're there supporting our members with everything we can in terms of troubleshooting.

We're going to run a forum in early July or mid-July to make sure people can go through the realities of what's happening with AML.

There is certainly no shortage of compliance, if that's where the question was aimed at. There's a lot of compliance work, and it is really tough.

We talk about how tough it is for property managers, and it is. Even for sales staff now, and individual real estate offices being able to meet their compliance requirements, it's a lot of hard work. It's costly, and we want to support them as best we can.

Peter Schravemade (29:19) Yeah. Let's say you're a small office with a rent roll. All of these changes, AML is probably the biggest legislative change I've seen since I've been in real estate.

On top of that, we've got all these other compliance requirements coming in. You've got the challenges to the reserve around the auction.

It just appears to be dazzling. Every week on this podcast, we have another one.

A lot of your members are quite forward about talking about it on Instagram as well.

Don't forget, last time I was down there, we were talking about the movement towards only a single prescribed form for tenants as well. That's another change.

I think we could probably talk about this for the next two hours, but we don't have time.

You're doing a great job down there. I don't want it, but I'm so thankful that somebody like you is in that position.

Toby Balazs (30:16) It's challenging, like all good jobs should be, but I really feel honoured to be able to do this job.

Hopefully I do it as well as our members want to see. I think at times they feel as though the weight of legislation coming down the pipe raises questions as to what we're doing.

I lean into that and say, "I understand that."

What I can tell you is there's a lot of work being done to try and manage these legislative changes. But it does take two sides to engage to then be able to drive a better outcome, and that's what we're trying to do.

Peter Schravemade (30:56) At the end of the day, we need a voice in there, and you guys are doing a fantastic job of that. I can see that.

Obviously, I get down there a lot more often than anyone else, but I think just across the board, even from the REIA down, we seem to have a really good network, a well-informed network of CEOs who are actively acting on behalf of their members.

So, on behalf of the Victorians, even though I'm a proud Queenslander, I thank you for the job that you're doing. Keep up the great work.

It's wonderful to have you on the podcast. We might just check in in another month and ensure that your mental health status is up there.

Toby Balazs (31:39) I might be shaking in a white straitjacket by that point, Pete.

Peter Schravemade (31:42) Yeah.

If you need a break, mate, come to Queensland.

Toby Balazs (31:47) I'll be coming up in a few weeks' time.

Peter Schravemade (31:48) For the LIFT conference. Fantastic. That'll be great. It'd be great to host you up here.

I thank you so much for your time today. It was really important that we get you on board to have a chat, and good luck in holding the line. Let's go with that.

Toby Balazs (32:03) Thank you, mate. Pete, thanks very much for the opportunity to come on and have a chat.

I love working with you and the REACH team and all the work that you do across proptech in Australia.

I would say that you and all the events that you run, and the podcast you're doing, you're a great commentator on the industry. You understand it really well. I think you call it as you see it, and that's very refreshing. We all love it.

So thank you.

Peter Schravemade (32:29) Appreciate it, Toby. All right. We'll call it quits. Have a great weekend.

Toby Balazs (32:33) Good on you, mate. You too. Take care.