When was the last time you heard good news about the property market in New South Wales? Between falling property prices and possible changes to negative gearing laws, investors are nervous about the future of investment.
But within all the doom and gloom, there have been some recent legal changes to provide better protection for off-the-plan investors.
New regulations to safeguard investors
In the last financial year, off-the-plan purchases made up almost 12% of properties bought in NSW. Recognising this increasing segment, the New South Wales parliament approved new laws in November 2018 to provide people purchasing off-the-plan properties with more certainty about what they are buying.
What this means is that before a contract is signed, sellers will need to disclose crucial information about the development. This means ensuring that people who have put a deposit on a property need to be advised of things like changes to the size or configuration of a unit (for example, if the developer changes its plans to enclose a balcony or to make the unit smaller than they had originally planned). On top of this, sellers and developers also need to make sure that purchasers are given all relevant paperwork before they sign a contract. This includes things like:
- A copy of the proposed plan as well as details of easements and covenants
- Any proposed by-laws that may be part of a strata unit development
- A full list of any finishes, which includes things like lights, paint and fittings, both in the unit and the common areas.
Cooling off period extended
A further important change is the extension of the cooling off period for off-the-plan contracts to 10 business days (from 5 business days).
Changes are proposed and not yet in place
It’s important to remember that these are currently only proposed changes. The provisions are expected to become law sometime in 2019.
Impact on developers
It is important that developers and their financiers are aware what these proposed regulations are and have a good grasp of their responsibilities and implications for non-compliance.
If you’re a developer, you need to be aware of what changes you’ve made to the building. Keeping a schedule that allows you to easily compare a list of what was originally suggested in the display compared to what is used in the development will mean that you can quickly and easily advise purchasers of items that may impact them. It is important to remember that if you don’t advise purchasers of these changes in a timely manner, it could provide them with an opportunity to claim compensation.
When you’re in the middle of construction, it can be hard to keep abreast of all changes being made. A simple but effective system like MYBOS can help capture and manage your property development and workflow management from start to finish, ensuring you remain on top of your development and your legal obligations.