ASIC has confirmed that super funds and managed investment schemes are not required to disclose property asset operating costs – a move welcomed by the Property Council.
The Australian Securities and Investment Commission released an updated version of the RG97 fees and cost disclosure requirements last week.
“The update confirms that property operating costs will not need to be disclosed,” explains the Property Council’s executive director of capital markets, Belinda Ngo.
The previous RG97, introduced by the corporate watchdog three years ago, required disclosure of asset level costs for direct and indirect investments in property. This could include operating costs such as electricity, land tax, council rates, cleaning costs and property management costs.
A moratorium was established March 2017 pending a review, and ASIC appointed an external expert to review the rules last year.
Ngo says the Property Council and the superannuation industry had been “advocating strongly” for the removal of property operating costs from RG97.
“This level of disclosure was not required for other investment classes, such as equities, infrastructure and private equity,” Ngo explains.
“The disclosure requirement for property operating costs would have artificially inflated costs associated with property investments and potentially led to superfunds reducing their asset allocations to property.”
The Property Council is also reviewing changes to the presentation of information and guidance on disclosure requirements within RG97.
“We will consult closely with our members to ensure there are no unintended impacts from these additional changes,” Ngo adds.
“But overall we applaud ASIC for listening to the property industry and addressing our concerns. Property is part of a balanced and diversified investment portfolio that generates stable long-term returns for investors, and we need a disclosure regime that supports this.”