Developers who delay new homes could be hit with financial penalties
New protections for home buyers who purchase off the plan are being considered by the Minns government with developers who fail to deliver homes potentially facing heavy financial penalties.
NSW
Don't miss out on the headlines from NSW. Followed categories will be added to My News.
Developers who fail to deliver homes bought off the plan and unfairly gouge cash from buyers could face heavy financial penalties under reforms being considered by the Minns government.
Consultation is currently underway for new legislation preventing developers from using legal loopholes to delay homes they have been contracted to deliver, and giving buyers more power to exit a contract should problems arise.
Home buyers who purchase homes off the plan before they are constructed, enter into a contract with the builder at an agreed upon price.
More than five per cent of 180,000 residential purchases across the state last financial year were off the plan contracts. While most off-the-plan purchases go without a hitch, in some cases developers use indefinite sunset clauses to delay construction in order to wait for a more favourable price, or abandon the project altogether, leaving buyers in the lurch.
Potential reforms being considered include introducing a cap on the number of times developers can extend the date a project is completed, with a statutory obligation for developers to meet the dates they set. In a situation where dates in a sunset clause are not met, developers could be forced to pay damages to the buyers.
Currently, some off the plan projects have been extended for years, with buyers having no way out of the contract.
Another option proposed other than a cap, involves a legislated maximum in which the seller must settle the contract.
Additionally the proposals could require developers to outline more detail about the status of a project, including development approvals and whether the builder owns the site. Currently developers are not obliged to provide this information.
Under the proposals, it will also be easier for buyers to leave a contract should building times drag out too long, with all projects to require a mandatory sunset clause as to when a project will be delivered, giving buyers an opportunity to pull out should developers fail to deliver on time.
Developers will still be able to extend sunset dates only for certain reasons beyond the developer’s control such as weather or supply chain issues.
Registrar General Danusia Cameron, who has commissioned the review, told The Daily Telegraph she was attempting to standardise best practice for the industry.
“We are aware of projects that have stagnated, where buyers are frustrated by extensive delays or where there doesn’t seem to be any work on the ground,” she said.
“We have also seen reports of developers cancelling buyers’ contracts many months or years after these buyers signed up and paid their deposit.
“Unfortunately, these projects are often large-scale developments, with multiple lots – and many affected buyers.”
The consultation period will go till March with the view to informing new legislation later this year.
Customer Service Minister Jihad Dib said the consultation period was designed to make sure home buyers were protected, while still allowing developers to build.
“We know that most developers do the right thing, but we don’t want situations where businesses try to run down the clock on a contract to sell to a higher bidder or mislead consumers by unfairly changing the goalposts for when they can move into their dream home,” he said.
“These reforms are designed to provide greater transparency as well as encourage the delivery of new homes. These proposals are about encouraging developers to be upfront about timelines and challenges to assist homeowners.”
More Coverage
Originally published as Developers who delay new homes could be hit with financial penalties
Join the conversation
‘Simply doing their job’: Police Commissioner backs down
The NSW Police Commissioner has backed down on her claim the media “compromised” the investigation into the explosive-laden caravan discovered in Dural, saying she did not intend to blame The Daily Telegraph.
Read more
Man dies after boat capsizes in river mouth
A boatie has died on the state’s Mid-North Coast after his vessel capsized in a river mouth, with lifeguards describing the fatality as a “sad incident so close to the end of the summer holiday period”.
Read more
Third person arrested on ‘periphery’ of caravan terror probe
A third person on the “periphery” of the caravan terror plot was arrested earlier this month over his links to the discovery of eight underworld “kill cars” at a Fairfield East warehouse.
Read more
Jewish leader calls for police guard at schools
The NSW Jewish Board of Deputies wants extra security as schools go back for the year, “until the current threat to the community has subsided”.
Read more
Ex-wife makes huge claims about Buddle’s foreign marriage, child
The mother of Mark Buddle’s two children says he calls them daily and rejects claims he fathered a son by woman he wed in Turkey, calling their marriage “just a transaction.”
Read more
‘Massive mistake’: Waterhouse’s plans for $100m home spark outrage
A plan by the former daughter-in-law of a late bookmaking legend to subdivide one of Sydney’s most expensive trophy homes has sparked a planning row among neighbours in the harbourside suburb.
Read more