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The state is drafting new policies aimed at safeguarding South Australian consumers in the new home market.
The South Australian government has launched a review of the building and construction industry which will be undertaken by Consumer and Business Services (CBS), and opened submissions for community feedback around proposals to improve protections for South Australian home buyers.
These recommendations for reform were identified by the Minister for Consumer and Business Affairs and the state government, and informed by discussions with industry stakeholders before being publicly proposed in a recent CBS discussion paper.
The South Australian government will seek to implement a regulation scheme for developers after CBS reported instances of South Australian builders deliberately postponing the completion of construction work in order to cancel a contract using a sunset clause and sell the property at a higher price.
As a result of this process, purchasers are then left at a significant disadvantage by being unable to benefit from the increase in land value since signing the contract, and consequently may find themselves priced out of higher property markets.
The state’s consumer watchdog also acknowledged situations where builders have indicated their intention to use a sunset clause to terminate a contract if additional funds are not paid by consumers.
For this reason, the government also outlined new rules which would limit and regulate the use of “sunset clauses to terminate off-the-plan contracts”, and would also increase the penalties for parties who fail to attend mandatory conciliation meetings for building disputes.
Another proposal would require building inspectors to be registered or licensed, with the South Australian government explaining that the profession does not currently require credentials despite the “enormous responsibilities they have to potential home buyers”.
The government also recommended the introduction of a binding rectification order scheme administered by CBS, which would mean that the disputes around defective work could be more quickly and cost effectively resolved without parties having to navigate court proceedings.
An alternative option also proposed that jurisdiction around domestic building work disputes could be transferred entirely from the Magistrates Court to the South Australian Civil and Administrative Tribunal (SACAT) for faster and cheaper dispute resolution.
These proposals and others outlined within CBS’ discussion paper are now open for public consultation until 17 January 2025.
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