Have Your Say Before Consultation Closes on Friday, 7 March 2025
What is an Off-the-Plan Contract?
An off-the-plan contract relates to selling and buying property that is not developed yet. For example, purchasing property before land is subdivided and the building is constructed.
Current Issues
In 2019, reforms were made to laws governing off-the-plan contracts in New South Wales. However, recent issues have led the NSW Government to consider further changes.
Key issues include developers delaying settlements and extending sunset dates. A sunset date allows contract termination if subdivision plans are not registered, or occupation certificates are not issued, on time.[i] Extending the sunset date causes buyers to have no clear timeline for completion.
Purpose of Reforms
The proposed reforms aim to enhance buyer protection.[ii] As the Minister for Customer Service and Digital Government, Jihad Dib, has stated, “We know that most developers do the right thing, but we don’t want situations where businesses try to run down the clock on a contract to sell to a higher bidder or mislead consumers by unfairly changing the goalposts for when they can move into their dream home.”[iii]
Proposed Reforms
Mandatory Sunset Clauses and Limited Sunset Date Extensions
The NSW Government is considering making sunset clauses a requirement in off-the-plan contracts. This would allow buyers to withdraw from the agreement if events, such as construction, do not occur by a certain date.[iv]
Further, there is proposed reform which would see extensions to sunset dates limited. Reasonable grounds for an extension would relate to circumstances out of the developers control such as supply issues.[v]
Disclosure of Development Status
Developers may be required to provide regular updates to buyers on the progress of the development.
Removing Restrictive Covenants
Sometimes developers impose covenants when land is subdivided, which can restrict how land is developed or used.[vi] The government is considering reforms to simplify the removal of some covenants.
Next Steps
The NSW Government is currently inviting community feedback via a survey or formal submissions. Consultation remains open until Friday, 7 March 2025. If you are a developer or a buyer considering purchasing off-the-plan or are already navigating an off-the-plan contract, have your say here: HaveYourSay.
If you need assistance with a current off-the-plan contract or are considering buying or selling off-the-plan land, get in touch with our experienced property team today at office@jenkinslegal.com.au or 02 4929 2000.
This article is not legal advice, and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
[i] NSW Government, Have your say: Off the plan contracts and covenants laws under review, accessible here https://www.haveyoursay.nsw.gov.au/offtheplan-contracts-covenants
[ii] NSW Government (Minister for Customer Service and Digital Government), Off the plan contract laws under review to provide greater certainty to buyers, 31 January 2025, accessible here https://www.nsw.gov.au/ministerial-releases/off-plan-contract-laws-under-review-to-provide-greater-certainty-to-buyers
[iii] NSW Government (Minister for Customer Service and Digital Government), Off the plan contract laws under review to provide greater certainty to buyers, 31 January 2025, accessible here https://www.nsw.gov.au/ministerial-releases/off-plan-contract-laws-under-review-to-provide-greater-certainty-to-buyers
[iv] NSW Government, Have your say: Off the plan contracts and covenants laws under review, accessible here https://www.haveyoursay.nsw.gov.au/offtheplan-contracts-covenants
[v] NSW Government, Have your say: Off the plan contracts and covenants laws under review, accessible here https://www.haveyoursay.nsw.gov.au/offtheplan-contracts-covenants
[vi] NSW Government, Have your say: Off the plan contracts and covenants laws under review, accessible here https://www.haveyoursay.nsw.gov.au/offtheplan-contracts-covenants
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