Estate Agents Co-operative (EAC) along with other industry stakeholders met with Minister for Innovation and Better Regulation, Victor Dominello (pictured), today to discuss better protections for purchasers in regards to off-the-plan contracts.
Off-the-plan contracts contain within them a Sunset Clause, a mechanism allowing the contract to be terminated if the development is not finalised within an agreed time frame or if the promised property cannot be delivered to the standard agreed.
Most sunset clauses’ allow the vendor or developer to rescind the contract if the construction runs over expected completion time. The NSW Government has stated that it would appear some developers are using the sunset clause in order to cancel the contract and re-sell apartments at higher prices. These clauses’ are also usually constructed in favour of the vendor/developer.
NSW Department of Land & Property Information has held a consultation period of 3 weeks for the public to raise their concerns over these issues. During which the department received close to 650 responses.
“This issue is being largely driven by current market conditions which have seen housing prices rise rapidly, in turn we are now seeing developers using unwitting property purchasers’ deposits to fund building works and are then intentionally slowing works in order to rescind contracts and then resell to gain greater profits,” said EAC CEO, David Crombie. “Estate Agents Co-operative commends the Minister for taking action.”
Today’s meeting saw various options presented by NSW Department of Land & Property Information which were discussed at the meeting.
“Changes to stamp out the practices we have discussed can be expected early in 2016,” said David Crombie.
In attendance at today’s meeting were representatives from NSW Land & Property Information, Estate Agents Co-operative, Urban Development Institute of Australia, Law Society of NSW, Owners Corporation Network, Australian Bankers Association, Australian Institute of Conveyancers, Urban Taskforce, and HIA.