What are the implications of privatising land title offices?

The New South Wales government is set to privatise its land-titling services. This decision may provide the impetus for other states and territories in Australia to go down the same path.

But what are the implications of privatising the operation of title offices for the Australian public?

What are title offices and why do they matter?

Title offices maintain a registry that defines the ownership and boundaries of private and public properties and keeps records of changes to the properties as they happen.

Details of various changes affecting the land – such as mortgages, restrictions, leases and rights of way – are also recorded in the registry.

So, if you are about to commit hundreds of thousands of dollars to buy a property, you or your solicitor need to search the registry and make sure the seller is not a pretend owner, and the dimensions of the property are the same as what the registry says.

Similarly, if you want to subdivide your backyard to sell or build a new dwelling, it is necessary to look into the registry about what you can and can’t do in your backyard.

Australians may do business with a title office only a couple of times in their lives, but they do provide services to many people every day. For example, in NSW, about 900,000 land dealings (like transfers of title or mortgage discharges) were lodged and almost 53,000 new titles registered in the 2014-15 financial year.

Australia’s stable and reliable property market is a key contributor to the country’s economy. From buying and selling to financing property, title offices underpin billions of dollars of economic activity every year. The robust titling systems in Australia’s states and territories are one of the reasons the country was among the least affected by the global financial crisis.

Australia’s system is a simplified land registration method that guarantees the ownership of a property if it is recorded in the title office. Although there is always room for improvement, this system of registration is one of the best and most efficient in the world.

In Victoria, if you have all the necessary documentation you could transfer the ownership of property in 24 hours. Many countries around the world – including the US – cannot even dream of such efficiency.

But what might privatisation lead to?

Uncharted territory

Title offices usually do not cost the government; they generate revenue through the provision of land-related services and selling land and property information.

But, if privatising title offices is being done with the aim of improving its performance, does any provider in Australia already have a better service in place to do the job more efficiently than it is being done now?

Impact on individuals

Apart from the economic significance of land and property, arguably a property could be the most valuable asset an average person could own in their life.

Although the announcement emphasises that the government will continue guaranteeing titles, the for-profit philosophy of privatisation can lay the groundwork for the private sector to negotiate more profitable alternatives such as the insurance-based titling system that operates in the US. So this may well be the starting point of moving away from guaranteeing Australian land titles.

Impact on the public

Land information that is created in the process of titling is accurate, assured and authoritative.

When you subdivide the backyard of your million-dollar property, a new title is to be created. In this process, a licensed surveyor prepares a plan, which is lodged and registered with the title office. Before being registered, the title office staff examine the plan to ensure the ownership boundaries on the plan correspond with the boundaries as marked on the ground.

Land information generated and maintained in title offices has a documented and legally valid audit trail. This is not only key to the property market and land development, but is critical to many public services such as infrastructure engineering, emergency management, or disaster responses. Any compromise on the private sector’s part will have significant consequences, which could go beyond the properties we own.

Privatisation has its advantages. But Australia’s title offices may not necessarily be the right government businesses to be privatised.

Mohsen Kalantari receives funding from Australian Research Council, Bushfire and Natural Hazard CRC, the University of Melbourne, Open Geospatial Consortium and Australian Urban Research Infrastructure Network. He is a member of Surveying and Spatial Sciences Institue, Surveyors Registration Board of Victoria and affiliated with International Federation of Surveyors. However, the views expressed in the article are those of the author and do not necessarily reflect those of these groups.