The New South Wales government has passed changes to the Conveyancing Act, protecting the growing number of off-the-plan purchasers in the state.
The changes, which took effect this month, will impose stricter requirements on developers regarding disclosures, cooling-off periods, holding of deposits, and sunset clauses, particularly concerning off-the-plan purchases.
New South Wales witnessed strong growth in off-the-plan purchases over the last decade — from 2,646 in the 2008-2009 financial year, to 17,218 in 2018-2019. Minister for Customer Service Victor Dominello said off-the-plan purchases now represent 10.6% of residential property sales.
"Buying off-the-plan is a popular option, particularly for first-home buyers, but there can be risks and uncertainties involved," he said.
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Under the new rules, buyers will be provided with key information about the development, including copies of the plan, proposed by-laws, and schedule of finishes. These will be done before contracts are signed.
Vendors will also now be required to notify buyers of material changes to what was disclosed during the initial communication. If the changes "materially impacted" the buyers, they will be allowed to end the contract or claim compensation under the new rules.
Here are the other changes:
- Requiring vendors to provide 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
- Extending the cooling-off period to 10 business days with any deposit to be held in a controlled account until settlement
These changes will be crucial to ensure continued improvement in the sector, said Minister for Better Regulation and Innovation Kevin Anderson.
"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," he said.