This paper identifies a set of reform proposals that the NSW government is considering for off-the-plan contracts. The proposals are designed to strengthen protections for consumers buying property off-the-plan. At the same time, the reforms aim to provide greater clarity for developers, allowing sufficient flexibility to encourage innovation and investment in new homes.
Developers tackling large residential and mixed-use projects are vulnerable to significant risks during the development phase. Planning approvals, financier requirements, unforeseen delays and changing market conditions are just some of the factors that can have an impact on the form, expectations and viability of a proposal.
To mitigate against these risks the developers need to retain some level of control over design, timing and staging. The need for control should not come completely at the expense of purchasers. Many purchasers are unable to negotiate contract terms that fairly balance the rights of both parties.
This paper canvases a range of measures that will help standardise practices within the industry and provide a better outcome for all sides. The mechanisms being considered include a combination of:
- Mandatory Disclosure;
- Implied contract terms
- Standardised notice periods where changes are needed
- Minimum requirements for the holding of deposits.