NSW introduces new sunset clause laws for off the plan
There’s good news for property buyers in New South Wales buying off the plan properties, with new rules for sunset clauses coming into force aimed to increase protection for buyers.
The introduction of these new Sunset Clause laws will make it harder for developers to enact sunset clauses and overrun past the sunset date in order to line their own pockets.
When buying a property off the plan, there is a sunset clause put in place which allows a buyer or developer to rescind an off the plan contract if work has been drastically delayed. However, some developers have been using this sunset clause to their own advantage to purposefully overrun a project in order to cancel existing contracts and then resell the property to new buyers at a much higher price to reflect the current market. This has been particularly seen in markets such as Sydney which have seen property prices soar and developers want to cash in on this increase too.
On Monday, NSW Minister for Innovation and Better Regulation Victor Dominello announced that he will introduce legislation into Parliament at the next available session in November.
What this means is that under the proposed changes, a developer will now have to seek consent from the purchaser first to go through with the termination. However, if the buyer is not in agreement then the developer will then need to justify any termination, and if necessary, apply to the NSW Supreme Court for permission to allow this termination to take effect. It is then up to the court to decide whether this termination is fair in all circumstances and whether the developer is allowed to terminate current off the plan contracts.
Currently, if a purchaser has been dispossessed and wants to prove that a developer has been dodgy and deliberately delayed work to go way beyond the sunset clause date to cash in on higher market prices, then the purchaser will have to go to court at a later date and pay for this at their own expense which is not always a possible outcome for many buyers who have been left high and dry.
Once the legislation comes into effect, this new sunset clause legislation will not only apply to all contracts made after this date, but it will also apply to any contracts that have already exchanged but yet to reach the sunset clause date.
Mr Dominello stated “There is a great deal of community concern about developments being intentionally delayed so that off the plan contracts can be terminated under a sunset clause”.
He also commented that “Developers are now on notice that any unscrupulous behaviour will not be tolerated.”
“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,” he said.
Although this new sunset clause legislation will not help previous buyers who have unfortunately experienced dodgy developers taking advantage of the property market and their situation, future buyers will have greater protection and it is hoped that this new legislation will also make people more eager to purchase a property off the plan.
With a high demand for brand new properties and a trend for buying off the plan properties, many more people will be buying off the plan properties today and in the future and this legislation will give more security and confidence when buying in New South Wales, with the aim to deter dodgy developers rescinding off the plan contracts for their own financial gain.
It is important to remember that not all developers are dodgy and out to take advantage of off the plan purchasers. At iBuyNew we pride ourselves on working with reputable developers who have a good reputation and are known for their high quality of workmanship.
If you are concerned about which developer you should be using or would like further assistance with purchasing a property off the plan in Sydney, Melbourne and Brisbane, then our expert Property Consultants are ready to help.
Call us today on 1300 123 463 or why not send an enquiry online.
Published on 4th of November 2015 by Marty Stanowich