People buying off-the-plan will have better consumer protections once new laws are in force from later this year.Source retrieved from domain.com.au
Sue Williams Domain Reporter | June 11 2019
Off-the-plan property buyers will soon be better protected when long-awaited legal changes come into effect this September – and inject much-needed confidence into the Sydney new apartment market, project marketers predict.
Rorts like selling a one-bedroom apartment off the plan that turns into a studio by the time it’s built and developers cancelling sales contracts to take advantage of higher market prices will be relegated firmly to the past.
As a result of changes to conveyancing laws approved by the NSW Parliament late last year and to be introduced in the next quarter, developers will be made more accountable to buyers, and there’ll be more certainty.
“We’ve put the legislative changes into our business model, to the point where we advised developers with projects ready to launch to wait until this year when they come in,” said Dennis Vertzayias, national director and head of NSW residential project marketing at Colliers International.
“It provides for a lot more certainty in the market with full disclosure to buyers. We are in full support of the changes. The worst prospect for the off-the-plan market is uncertainty, and so we feel it’s better to wait and have a clearer picture going forward.”
The changes include buyers being able to rescind a contract where a material change to an apartment or townhouse adversely affects their use or enjoyment of the property or where, if they’d have known about those changes beforehand, they would not have bought in the first place.
A developer will have to take a claim to rescind a contract to the Supreme Court. Photo: James Alcock
Developers, on the other hand, can only cancel a contract — if the buyer doesn’t agree to it — on application to the Supreme Court. The law has further been amended to allow the court to award damages to purchasers who suffer a loss because of the termination, even if it finds the developer’s rescission is just and equitable.
As the vendors, developers will also need to provide full disclosure statements with details of the building, bylaws, schedules of finishes and sunset dates, and to notify purchasers of any changes, particularly in floor plans and those bylaws. Meanwhile, the cooling-off period for buyers will increase from the current five days to 10.
The Office of the Registrar-General, in introducing the changes, said: “Off-the-plan buyers have been particularly vulnerable to the actions of developers, being generally unable to inspect the property before purchase. The new laws address this vulnerability by creating a more transparent process, setting minimum standards of disclosure and providing statutory remedies where the final property differs from what was promised.”
Mr Vertzayias said that off-the-plan buyers today generally wanted to know more about the developer, the builder, and what the finished apartments would contain, so the changes would help to give them more confidence.
“It is a huge step forward for purchasers,” said lawyer Benjamin Grady, senior associate commercial and real estate with Bradley Allen Love Lawyers. “It may take developers some time to adjust to the changes, but in the long term, it will help both sides.
“Buyers in the past have taken more risk with off-the-plan purchases than they probably should have, so this gives them better protection and reassurance about the quality of the build and gives everyone more certainty and balance between the parties, and less negativity around defects and sunset clauses.”
The government says the new laws will keep developers accountable. Photo: Leigh Henningham
Customer service minister Victor Dominello is overseeing the process of change. “The new laws are a win for buyers and will provide them with greater confidence and certainty when purchasing property off-the-plan,” he said.
“Buying off-the-plan has become increasingly popular, but we’ve all heard the horror stories when things go wrong. These changes will bolster protections for buyers by establishing minimum disclosure standards and ensuring developers are held accountable for delivering what they promised at the time of purchase.”
As the peak body for strata owners, the Owners Corporation Network has been strongly supportive of the reforms. “They are much needed,” said executive officer Karen Stiles. “Off-the-plan purchasers currently have few rights, with off-the-plan contracts heavily weighted in favour of the developer. Consumers have more protection buying a bar fridge than a $1 million apartment.”
And one new apartment buyer last year who ended up going to court – and winning – in a fight with a developer over sunset ‘clawbacks’, where the developer was accused of delaying work to trigger the rescission clause in order to resell the Surry Hills unit for a higher price when finished, also applauded the changes coming in.
“Any increase in legislation that favours the consumer is of benefit and can only be a good thing,” said Tom Christensen, 31, a financial product manager. “If the NSW Government is going to charge people three per cent stamp duty on every purchase, then they almost have an obligation to protect consumers as much as possible.
“If these laws had been in place earlier, it would have saved us having to engage in a David and Goliath battle against our developer with all the resources, time and stress that involved. This will only give consumers much more confidence about buying off the plan.”
Williams, S. (2019, June 11). NSW off-the-plan buyers to get better protection under new laws this year. Retrieved from https://www.domain.com.au/news/nsw-off-the-plan-buyers-to-get-better-protection-under-new-laws-this-year-847409/
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