Developer's selling off the plan will now be accountable for contract breaches and compensation claims with a string of new laws aiming to further protect buyers.
The NSW Government announced the 2018 Conveyancing Legislation Amendment Bill, which will require buyers to be provided proposed plans, and notice of changes, at least 21 days before the buyer is made to settle.
Buyers will also be able to terminate the contract or claim compensation if they are affected by changes made from what was disclosed.
They will also be entitled to a cooling off period to 10 business days with deposits held in a controlled account.
Expanding on existing legislation, the Supreme Court will also be able to award damages where the vendor terminates under a sunset clause.
“Buying off-the-plan has become more popular among first home buyers in recent years,” NSW Minister for property Victor Dominello said.
“While it works well in most cases, we’ve all heard the horror stories when things go wrong.”
“This new bill changing the Conveyancing Act will widen legislation to clarify that the NSW Supreme Court can award damages in such cases, as well as making sure buyers are provided with proposed plans, bylaws and schedules of finishes before contracts are signed, and extending the cooling-off period to 10 business days.”
Off-the-plan properties account for approximately 12 per cent of all residential property sales in NSW, with nearly 30,000 sales registered in the last financial year.
The new laws will now bolster existing protections for buyers, by establishing minimum disclosure standards and ensuring that developers are held accountable for delivering what they promised at the time of purchase.
Sydney's Off-The-Plan Market Stalls
While it firmly remains a buyer's market, there has been an evident slump in new projects coming online and off-the-plan sales as those in the market looking north of the boarder for more affordable opportunities.
Reluctant or credit-squeezed buyers are now carefully weighing up their investment options.
Urbis' latest Apartment Essentials report revealed an 88 per cent slump in Sydney off-the-plan sales over the last quarter compared with the same period last year.
“The national apartment market will continue to see lower sales volumes with a less consistent flow of new apartment marketing launches, buyers sitting on their hands and banks slowing the credit flow to developers, resulting in fewer construction commencements,” Urbis national director Clinton Ostwald said.
Ostwald said that while he has seen similar flatlines in the past, the current flatline is not expected to reverse course anytime soon “due to the weight of negative sentiment in the broader residential market”.