Does the privatisation of land registries work?
NSW Land Titles Office Up for Sale
Opposition continues to grow to the NSW Government’s plan to sell a 35 year lease of the NSW Land Titles Register. It is at the very least a curious proposal – the selling of a natural monopoly into private ownership.
The precedents are not good; the most notable being the 1990s sale of Sydney’s international and domestic airports to a Macquarie Bank owned and operated consortium. This resulted in steep increases in costs for parking, taxi access and other charges as the private operator leveraged its monopoly power to maximise return to its shareholders.
The motivation for the proposal is unclear. Ironically, its genesis appears to be a scoping study prepared by Macquarie Bank in 2009 which pointed to the LPI being a “highly strategic asset” for the private sector with significant retail opportunities. The government apparently wants the money to fund new sports stadiums.
But industry experts warn that privatisation will lead to higher costs, the need for Title Insurance (costing several hundred dollars per transaction) and fraud risks.
Groups opposed to the proposed sale include all major industry participants including the Property Council of Australia, The Real Estate Industry Association of NSW and the Law Society of NSW. The latter states:
“Our opposition to the sale is not grounded in any vested interest and serves no commercial value to lawyers. Nor do we have any ideological opposition to privatisation. Rather, our roles as lawyers afford us an objective appreciation for the innate value of the LPI as an independent public asset, one that underpins over $1.2 trillion in real estate and $130 billion in economic activity every year.
“It is not an understatement to say the LPI is the foundation upon which the NSW economy rests. The integrity of LPI and the public’s confidence in the registry fortifies those foundations, preserving the wealth of hundreds of thousands of homeowners and investors across the state.
What does it achieve?
There is some recent experience with privatisation of land registries in some provinces of Canada. In Ontario and Manitoba it was done and there it is now “extremely expensive” to access the land database while the private monopoly provider feasts on a captive market forced to pay its fees for an essential service. Emeritus Professor Ian Williamson, a land administration expert at the university of Melbourne says that he is not aware of one case where the privatisation of a land registry has been successful.
In fact, apart from those who may seek to benefit from the privatisation proceeding it is hard to find a supporter. I love my sport, but this is one issue where the government needs to re-think its strategy and devise a policy based on the public interest rather than a short term money fix.
Written by Bruce Carr
- Sydney Morning Herald, NSW Premier Mike Baird points to Canada to justify land titles registry sell-off, 7 Dec 2016
- Prosper Australia, Does Berejiklian want to play Monopoly? Does Perrottet?, 4 Jan 2017
- Sydney Morning Herald, Leaked scoping study on privatisation of NSW's land titles registry offers clues, 14 Dec 2016