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The slate of potential reforms aims to strengthen protections for off-the-plan buyers, with financial penalties for developers who fail to deliver homes and unfairly profit off consumers on the table.
The NSW government is currently seeking feedback around potential reforms to off-the-plan contract laws, to provide stronger protections to buyers while accelerating supply and preventing delays.
The potential reforms, which have been released for comment, aim to tighten contract rules to give buyers a clearer timeline for when they can expect to move into their new home, and to reduce the uncertainty and risk of being left behind when a contract is cancelled.
Speaking on the reforms, Minister for Customer Service and Digital Government, Jihad Dib, said that “these proposals are about encouraging developers to be upfront about timelines and challenges to assist home owners”.
“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,” Dib said.
The state government suggested that this could potentially involve scrapping the ability for developers to draw contracts out with indefinite sunset clauses which give buyers no clear path forward, or the ability to exit an arrangement.
Registrar General, Danusia Cameron, highlighted that “off-the-plan buyers need more information and support than buyers of established homes because they are not able to inspect a property before committing to buy it”.
“It is important that the laws governing off-the-plan contracts also arm buyers with appropriate safeguards, meet the needs of the community, and address emerging issues in the sector to ensure there is continued confidence in the process,” Cameron said.
Other proposed changes the NSW government is considering include:
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Revising a developer’s ability to extend sunset dates to only apply for certain reasons beyond a developer’s control, such as weather or supply issues, and setting time limits on extensions.
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Requiring developers to take reasonable steps to meet dates by potentially introducing penalties for inaction.
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Making sunset clauses mandatory in contracts to allow buyers to withdraw if sunset events do not occur by a set time.
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Requiring developers to disclose the status of development against construction milestones to provide buyers a better understanding of time frames and potential risks.
The NSW government has invited industry and community to respond to survey questions or provide a submission on the reform proposals, with this consultation to inform the groundwork for legislation to be developed in 2025.
Potential reform for unlocking development sites
The state government also announced that it is considering unlocking potential development sites by making it easier to remove private, outdated agreements from land titles which restrict how land can be used or developed upon.
In order to support these reforms, the Office of the Registrar General has released a discussion paper outlining the options, entitled Contracts and Covenants: Reforms to Support Development of Land.
The Contracts and Covenants consultation will be open until 7 March 2025.
“We encourage people to have their say on these proposals which aim to boost consumer confidence in the off-the-plan contract process and help NSW achieve our housing targets,” Dib said.
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