Voluntary Conveyance in Australia 2025: Process, Benefits & Key Updates

As Australian households and businesses navigate an evolving economic landscape in 2025, voluntary conveyance is emerging as a practical—if sometimes overlooked—solution for those confronting unmanageable secured debts. Far from being an act of defeat, voluntary conveyance can provide a dignified, structured exit from financial distress, especially as new policies and lender attitudes shift in response to rising arrears and property market volatility.

What Is Voluntary Conveyance and When Is It Used?

Voluntary conveyance is the process by which a borrower hands over the legal title of an asset—most commonly real estate or vehicles—to the lender when they are unable to meet their loan obligations. This is typically pursued as an alternative to forced repossession or bankruptcy, allowing both parties to avoid lengthy and costly legal proceedings. In Australia, voluntary conveyance is most often associated with home loans, commercial property, and business asset finance.

• Residential example: A homeowner in Sydney, unable to keep up with mortgage repayments due to interest rate hikes, negotiates with their bank to voluntarily transfer ownership of the property, avoiding a formal foreclosure auction.
• Business example: A logistics company struggling with cash flow issues offers up its fleet of trucks to the asset finance lender, hoping to minimize legal costs and reputational damage.

In both cases, voluntary conveyance can help borrowers exit untenable situations with more control—and often less financial fallout—than a court-mandated repossession or bankruptcy declaration.

2025 Policy Developments and Lender Trends

With mortgage arrears ticking upward in 2025 and ASIC tightening its oversight of hardship practices, voluntary conveyance is being re-examined as a legitimate part of lenders’ loss mitigation toolkit. Recent updates include:

• Revised hardship guidelines: As of March 2025, the Australian Banking Association (ABA) has encouraged banks to explicitly mention voluntary conveyance as an option in their hardship communication packs.
• Consumer protections: New ASIC guidance requires lenders to clearly explain the consequences of voluntary conveyance—including the potential for residual debt if the asset’s value doesn’t fully cover the outstanding loan.
• Credit reporting changes: Under the latest Credit Reporting Code, voluntary conveyance is now recorded distinctly from foreclosure, helping borrowers maintain a more favourable credit profile for future lending.

Notably, some lenders are also offering incentives—such as waiving certain penalties or providing relocation assistance—to encourage cooperative asset handovers and reduce their own recovery costs.

Pros, Cons, and Practical Considerations

Voluntary conveyance is not a silver bullet, but it can deliver significant advantages for both borrowers and lenders. Key considerations include:

• Advantages for borrowers:
  • Greater control over the timeline and process
  • Reduced legal fees and public exposure
  • Potential to negotiate release from some or all of the residual debt
• Risks and drawbacks:
  • If the asset sells for less than the outstanding loan, the borrower may remain liable for the shortfall
  • Credit record will still reflect the default, though less severely than a repossession or bankruptcy
  • Some lenders may be slow to accept voluntary conveyance, preferring to pursue full legal recovery

For those considering this path in 2025, it’s crucial to:

• Initiate discussions early—before the lender commences formal recovery proceedings
• Request written confirmation of all terms, including any waivers of residual debt
• Consult a professional experienced in debt negotiation to ensure all implications are understood

Real-World Scenario: Navigating a Voluntary Conveyance in 2025

Consider Sarah, a small business owner in Melbourne. After a year of declining sales, she falls behind on her commercial mortgage. Rather than waiting for her lender to initiate foreclosure—which could take months and rack up thousands in legal costs—Sarah proposes a voluntary conveyance. The lender agrees, waives most of the penalty interest, and Sarah avoids bankruptcy, preserving her ability to start anew in the future. Her credit file shows the handover, but she is not blacklisted as she would be after a court-ordered repossession.

As economic conditions remain uncertain in 2025, voluntary conveyance is likely to play an even greater role for Australians seeking a respectful, pragmatic solution to overwhelming debt.