Click here for an example of a Real Property Constructions Contract from The Investors Club
Click here to download the Right Of Reply issued by the Members' Ethics and Parliamentary Privileges Committee
26 February 2008
The Speaker – Queensland Parliament
Parliament House
George Street
Brisbane Qld 4000
Dear Sir/Madam
RE: Members’ Ethics and Parliamentary Privileges Committee –
Citizen’s Right of Reply
In Parliament on Wednesday 13 February 2008, the Honourable Robert Schwarten made unfounded comments regarding the collapse of the building company RPC. We wish to have our ‘Right of Reply’ in an endeavour to correct the information or have the comments retracted.
On this date, the Honourable Robert Schwarten MP stated:
“I am informed that investigations by the QueenslandBuilding Services Authority shows that Real Property Constructions was involved with several of these wealth creation companies and identities which introduced clients to RPC at a price. These include the Australian College of Financial Education Pty Ltd, The Investors Club, the Blackburne Property Group, Onsite Direct and Gary Omara.
The BSA has uncovered that RPC was paying about $30,000 in commissions to these wealth creation companies on a typical house of $210,000, which is about 14 per cent of the total price. Members can work out for themselves just what a rort that was, and I note the agreement from the shadow minister. This obviously has a direct and dramatic effect on the builder’s gross profit.
To compound matters, the commissions were payable at an early stage of the contract. $10,500, or 35 per cent of the commission, was payable when the slab was poured.”
The Minister misinformed Parliament on the following points regarding The Investors Club:
- That our company was a “wealth destroying company”.
Since 1994, The Investors Club has created over 11,000 dwellings providing over 55,000 full-time jobs. The Queensland Treasury has gained over $120 million in stamp duty and has not subsidized any of The Investors Club costs. As a result of our services, we have created over 1800 property millionaires to date – a great Queensland based wealth creation achievement.
- That we were receiving “about $30,000 in commissions” on a $210,000 home.
Commissions received range from $14,000 to $21,000 on properties valued at $318,000 to $480,000. These figures (including GST) translate into a 4.35% to 5.52% commission - not $30,000 commission on a $210,000 purchase’.
- That we were receiving 14% commission on the total price.
RPC did not pay 14% commissions. Commission costs have ranged between 4.35% to 5.52% which is less than REIQ commissions with marketing costs included.
- That we were engaging in a ‘rort’ that ‘has a direct and dramatic effect of the builders’ gross profit.”
QBSA will confirm that a builder would not receive funding that did not show at least 6% as a realistic marketing cost. An additional ‘effect on the builder’s gross profit” is that agents require payment for marketing costs as the building progresses. A QBSA investigation would have shown that no such drain on vendor’s funds occurs with The Investors Club, nor do we received money at slab or at lock-up stage. Commissions are paid when the investor pays RPC on handover of the property.
- That 35% commissions were received at the time of slab.
No commission was received at time of slab therefore there could be no drain on RPC funds.
- That we received the balance of the property price at the enclosed stage.
All payment for the property was received at settlement – not at ‘enclosed stage’.
- That locked price contracts means RPC has no capacity to factor in rising costs
Fixed price contracts are industry standard. Construction estimators arrive at a price taking into consideration estimated price increases. The Investors Club never allows a member to sign and open-ended cost contract – we protect our consumers!
- That RPC could not refuse orders from The Investors Club under the terms of agreement.
The Investors Club has never entered into a ‘locked supply’ agreement with RPC.
- The Minister stated “For the life of me, I cannot understand why anybody would have anything to do with these wealth creation companies.”
With over 90,000 family members Australia-wide, The Investors Club provides a range of free services and ongoing support by way of property education and research which has resulted in delivery of the world’s safest lending record - $4 billion in mortgages without one default. 1500 hours of free weekly property research helps investors avoid traps such as RPC which was identified in May 2007 by our Research department as being an impending disaster. We stopped dealing with RPC immediately.
For the Speaker’s convenience, we have included a copy of the Hansard transcript with the above points noted for reference. We have also provided a printout of sales and commission rates for property sold through RPC and a copy of the contract from one of these sales as an example of the member agreement for your perusal.
The Investors Club has endured major media scrutiny across all states of Australian during the days following the Minister’s statements. 80% of our membership lies outside Queensland and the story was printed in all the major state publications (Sydney Morning Herald, The Age (Melbourne) and The West Australian) and we have attempted to correct the information printed with regards to these comments. In addition, The Investors Club has contacted the Honourable Robert Schwarten’s office in an attempt to have the facts corrected but have had no response.
The harm done to The Investors Club was immediate. With word-of-mouth and personal referrals to the business our greatest source of membership, the Minister’s inaccurate statements have tarnished our reputation and will continue to impact on sales, revenue and our ability to continue to protect property consumers in the future.
We respectfully request that the Minister’s comments in regard to this matter be corrected or withdrawn so as not to cause further damage to our company’s reputation.
Yours faithfully
Kevin Young
Director
The Investors Club
Incl: Hansard Transcript – 13 February 2008
RPC Property Sales and Commission listing
Contract of Sale