Purchasing an off the plan apartment is a fantastic way to enter the property market, comfortably downsize, or to embrace the amenity-rich lifestyle of apartment living.
Many Australians are moving away from detached family homes in favour of apartment living, and governing bodies are updating legislation in order to ensure that the many positives involved in the process are not overshadowed by potential negatives.
In order to make sure that all stakeholders in the process maintain the standards of transparency and service that many of the best developers have successfully maintained for years, the NSW state government has introduced new laws aiming to protect and empower buyers entering into an off the plan purchase.
Here’s what you need to know:
All of the below key reforms relate to contracts entered into on or after 1st December 2019.
Increased contract transparency
Through the introduction of Disclosure Statements – i.e. a document outlining what the NSW government deems to be the main or more confusing points of the contract after their thorough review – buyers will be able to more easily understand the key points of their contract.
You can view an example of this disclosure statement here. It covers points like the sunset clause (click here for our explanation of how this clause works), if there are any additional fees or charges beyond the deposit and settlement payments, if development approval has been obtained by the developer, expected construction commencement and completion dates, any on-going owners corporation or strata fees, and other such key information.
Notification of changes
Moving forward, if a developer plans to make changes to a ‘material particular’ (meaning an aspect of the development pertaining to the physical construction or appearance of the dwellings), which a buyer can prove would have meant they would not have entered into the initial contract, the contract can be terminated. Alternatively, the buyer can seek compensation of up to 2 percent of the sale price, but if compensation is awarded the contract can no longer be terminated under this new section of the legislation.
This puts more power in the hands of the purchaser, as it can often be nerve-wracking entering into a contract of sale for a home that you are not able to physically inspect. These new Notification of Changes laws aim to provide peace of mind that buyers understand and agree with the end result of the project and receive regular updates throughout the process.
The cooling off period
When purchasing an existing dwelling, the cooling off period is 5 days after signing the contract. This period has now been extended to 10 days for off the plan purchases, which recognises these contracts are often lengthier and more complex than those for existing dwellings.
From the 1st December 2019, all deposits for off the plan purchases must be held in a trust or controlled money account during the contract period. This protects buyers from losing their deposit in the event of the developer’s insolvency.
For more information on these changes, you can visit the NSW Office of the Registrar General website.
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