In the lead-up to this month's Insights Series events ‘Settlement Risk or Settle Down? - An Outlook for Residential Settlements in 2016/17, The Urban Developer sat down with Kristan Conlon, Partner,
McCullough Robertson to find out what the deal makers and breakers are with putting together a strategy for settlement success.
The recent boom in unit construction has seen record-high levels of new stock with the majority due to settle over the next 12 months. This wave of apartments, combined with banks curbing loans to foreign buyers has begun to raise questions on settlement risk.
So what can property developers do to protect themselves and safeguard for settlement success?
Ensure All Documentation Is Correct and Fully Compliant
It may seem obvious but you must make sure that all documentation is fully compliant. This extends to how documents are issued, signed and exchanged in accordance with the legislation. Your documentation must disclose all material correctly in the first instance or with minimal or no changes. Each time you make a change you may need to advise the buyer and potentially increase your chance of settlement risk.
Know Your Buyers and Where The Money Is Coming From
In the past there was more contact with buyers, however today we are seeing more foreign buyers who are being dealt with by foreign agents. Therefore, it is important to work closely with your on the ground agents to understand where your buyers are, how their payment is coming and by what date to manage expectations, and plan for settlement. Expect delays.
Great Communication Between All Parties Is Key
Information flowing from developer to buyer, their respective lawyers and sales agents is vital. Early communication of when settlement is coming and the steps that need to happen. We see great results with developers who provide regular updates to their buyers through email newsletters on how construction is progressing along with other handy information such as guides and fact sheets. A good agent will also keep their clients well informed and in front of what they need to do.
Understand The Banks and Their Lending Policy
Right now many major Australian banks are not lending to foreign buyers for residential apartments, even with proof of funding. And overall banks are tightening their lending policy. The banks are imposing restrictions on investors rather than owner operators and are not lending into certain postcodes. So be sure you understand this and how your customers will be sourcing their funding.
Keep The Quality High
Don’t cut corners. Developers who maintain high levels of quality product will maintain their position and brand in a downturn. Any discrepancy in quality of the product disclosed to that provided will increase settlement risk.
Tailor Your Strategy To Your Client
There is no one size fits all approach to settlements and that is why it is important to tailor your approach to your market. Consider your development and its buyers, then work closely with your agents to plan a marketing strategy that enables you to attract and retain buyers right through to settlement.
We will be jumping further down the rabbit hole at each event in Brisbane, Sydney and Melbourne. The events will include an invite-only panel of experts that will provide a comprehensive and sensible discussion focused on:
This is a must-attend event for anyone involved in the development of multi-residential dwellings in Brisbane, Sydney and Melbourne.
Seats are very limited so please ensure you book early to avoid missing out.