The 35-year lease to run the NSW’s profitable land titles registry has been sold to a consortium led by First State Super and Hastings Fund Management for $2.6 billion, in a move heralded by NSW Premier Gladys Berejiklian as a ‘massive infrastructure boost’ and by almost everyone else as a bad idea.
The only profitable part of the state’s Land and Property Information (LPI), the land titles registry, which currently makes about $130 million in net profit annually, was bought by Australian Registry Investments (ARI), a consortium made up of 80 per cent Australian institutional investors.
Investors include First State Super, investment funds from Hastings Funds Management and a 20 per cent stake held by the Royal Bank of Scotland Group’s pension fund, also managed by Hastings.
The winners beat off competition from three other consortiums: Borealis and Computershare; the Carlyle Group and Macquarie’s MIRA and Link Group.
The NSW government called it a ‘phenomenal result’ for NSW.
“Once again today’s result has significantly exceeded expectations,” Ms Berejiklian said.
“It means even more funding for the schools, hospitals, public transport and roads that people depend on every day.”
The government will drop $1 billion of the sale proceeds on upgrading Parramatta and ANZ Stadiums and refurbishing Allianz Stadium, while the remaining $1.6 billion will be invested into other infrastructure projects under its Restart NSW fund, which often funds roads and public transport projects.
The Premier has promised that at least 30 per cent of the total proceeds will be spent in regional NSW.
But while the government has argued that selling the lease to operate the land titles registry to the private sector would spur ICT investment and speed up the system, scores of real estate agents, surveyors, lawyers, unions and community groups have slammed the sell-off and called it a disaster.
They have argued that it will imperil the quality and reliability of the service, make it more expensive for ordinary people and push skilled staff out the door. Opposition to the sell-off spilled over into a public rally in Sydney’s CBD in March.
Land titles defines the legal ownership and boundaries of land parcels and is integral to buying and selling property, as well as taking out and paying off mortgages, leasing and inheriting property.
Despite the majority of people being blissfully unaware of the system until they need it, land titles underpins billions of dollars spent in the NSW economy and a $1.2 trillion real estate market.
The Public Service Association (PSA) called it a ‘a recipe for disaster for millions of property owners across NSW’.
“It is hands down, the most appalling fire sale decision yet by a Government with a strong track record in that area”, said PSA General Secretary, Stewart Little.
“The government trumpets its efforts on ‘life-changing projects’ but what could be more life changing for millions of people across NSW than to lose the security on their own property?
“Just as the PSA feared all along, ultimately the personal property records of the people in NSW will be held offshore given a portion of the successful consortium is based in London.”
But NSW Treasurer Dominic Perrottet defended the lease arrangement and said it had ‘rigorous legislative and contractual safeguards’ in place to ensure the continued security of property rights and data.
He said any increases in price were capped at CPI for the entire length of the lease and the government would continue to guarantee title, with the Torrens Assurance Fund compensating landowners who lost out due to fraud or error on the register, as happens now.
A new external regulator has been established – the Registrar General – to monitor ARI’s performance and resume control, if necessary.
Mr Perrottet praised ARI and said the company had prepared ‘a technology roadmap’ as part of its bid, helped by Advara, the private company that runs Western Australia’s land titles service.
He said Advara had introduced ‘world-leading titling and registry technology’ to WA and added that the Registrar General would review and approve any major changes to LPI’s IT system in NSW.
“This is an industry on the cusp of huge technological advances, and today we have partnered with some of Australia’s most reputable investors who will make sure the people of NSW get the benefit of those advances,” Mr Perrottet said.
“Combined with the tight regulatory framework we have established, the investment, innovation and experience ARI will bring mean citizens can expect a better experience.”
He said the ARI consortium had received approval from Commonwealth regulators including the Australian Taxation Office, the Australian Competition and Consumer Commission and the Foreign Investment Review Board and the transition to the new operator was likely to be finalised over the coming months. LPI staff have a four-year job guarantee as they transition to the new operator.
More to come.