Change in the air for NSW

Change in the air for NSW

Posted on Monday, November 02 2015 at 4:14 PM

At the same time as the New South Wales Parliament passes new strata laws, buyers purchasing off-the-plan in the state are set to have greater protections, too, thanks to changes announced by Minister for Innovation and Better Regulation Victor Dominello.

Real
Estate Institute of NSW president Malcolm Gunning described the new strata laws
as “a step forward to those who live in apartments”, adding that they were “in
dire need of reform”.

Meanwhile,
the state government will be introducing new laws later this month to make
developers justify any sunset clause termination of an off-the-plan sale.

“The NSW Government has listened to the concerns of its citizens and is
taking action,” Dominello says. “We are committed to ensuring certainty in the
property market and to protecting the rights of those who purchase off-the-plan
properties.”

Some NSW consumers
have reportedly had their contracts rescinded by a developer using the sunset
clause, only for the land or apartment to be re-sold the same day for a higher
price.

The proposed
legislation will apply not only to contracts made after the law comes into
effect, but will also apply to contracts that are still in operation.

“The NSW Government
is putting developers on notice that from this day forward if they use a sunset
clause for no other reason than to reap a windfall profit at the expense of the
purchaser, then they do so at their own peril,” Dominello adds.

“The overwhelming
majority of developers are reputable and do the right thing, and their industry
makes an important contribution to our state’s economy.”

A spokesperson for the Owners Corporation Network of Australia (OCN)
says the organisation is “delighted that off-the-plan purchasers in NSW will
soon be afforded protection against profiteering developers”, adding: “OCN commends the Minister…
for taking swift action to reign in these rogue developers when the media
recently exposed a number of them rescinding longstanding contracts to re-sell
at a much higher price. 

“OCN
is particularly pleased that the new legislation will apply to contracts which
haven’t yet reached the ‘sunset clause’.

“Developers
will have to justify any sunset clause termination of an off-the-plan sale.
This protects the purchaser whilst providing reputable developers a get-out clause
for legitimate reasons, such as planning permission or unavoidable building
delays.

“For
too long, off-the-plan purchasers have been the brunt of an off-the-plan
purchase system weighted heavily against them. Thick, complex contracts that
heavily favour the developer are common. Substantial changes to the floor plan
occur regularly. 

“Some
contracts have even required the purchaser to give their proxy vote to the
developer. This is fraught with danger when the building is likely to have
defects requiring urgent attention, and a developer less than willing to
address them.”

A total of 639 people responded to the three-week public consultation,
which closed on October 14. Industry groups were also consulted.

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