It’s not often in journalism that you can look at a change in state law and say “I had a hand in that.”
But the announcement of new protections for off-the-plan apartment buyers has its genesis in a conversation I had with the Fair Trading minister Victor Dominello more than four years ago.
We’d just had a coffee in his office and I was heading out when he asked me “what else is happening ?” I told him about a story that Flat Chat podcast co-presenter Sue Williams was writing, concerning what she was calling “sunset clawbacks”.
It was all about a grubby little practice that had popped up during the property boom where developers, watching the prices of properties soar way beyond their wildest expectations, would delay the completion of new buildings until they passed the trigger dates of the sales contract’s sunset clauses.
The sunset clauses, designed to protect property buyers in case their new unit was never completed, and developers if circumstances changed so radically that they couldn’t finish the building on time, were then invoked by the developers who woud give the initial purchasers their deposit back and then re-sell the units at a much higher price.
The original purchasers were left high and dry with a deposit of considerably reduced purchase power and, at best, had an opportunity to buy their original unit at a much higher price.
Mr Dominello was outraged and immediately pushed through new consumer protections to curb the practice until such times as comprehensive laws could be introduced.
This past Sunday, December 1, those new laws were finally enacted, giving off-the-plan purchasers a level of protection they didn’t have before. What do they involve? Here’s the Press Release from Mr Dominello’s office, concerning the new legislation of which he is (and we are) justifiably proud..
Prospective homebuyers will be better protected under sweeping changes to the law governing off-the-plan contracts. Changes to the Conveyancing Act, which take effect on 1 December 2019, will see much tighter requirements imposed on developers regarding disclosures, cooling-off periods, holding of deposits and sunset clauses.
Minister for Customer Service Victor Dominello said the number of off-the-plan purchases in NSW had increased significantly in the last decade from 2,646 in the 2008/09 financial year, to 17,218 in 2018/19, which represents 10.6 per cent of residential property sales.
“We are delivering on our commitment to better protect home buyers by closing down loopholes and increasing disclosure standards across the board,” Mr Dominello said.
The changes include:
- Buyers being provided with key information about the development, including copies of the proposed plan, proposed by-laws and a schedule of finishes before contracts are signed;
- Requiring vendors to notify purchasers of material changes to what was disclosed;
- Allowing buyers to end the contract or claim compensation in some cases if they are materially impacted by changes made from what was disclosed;
- Vendors providing a copy of the final plan at least 21 days before the buyer can be compelled to settle;
- Widening existing legislation to clarify that the Supreme Court can award damages where the vendor terminates under a sunset clause; and
- Extending the cooling-off period to 10 business days with any deposit to be held in a controlled account until settlement.
“Buying off-the-plan is a popular option, particularly for first home buyers, but there can be risks and uncertainties involved,” Mr Dominello said.
Minister for Better Regulation and Innovation Kevin Anderson said: “These changes are vitally important for the NSW Government’s building reforms which aim to deliver greater protections for consumers, while increasing the transparency, accountability and quality of work in the sector.”