NSW government proposes tougher rules to protect off-the-plan home buyers
The NSW government is considering reforms that could impose financial penalties on developers who fail to deliver homes or exploit buyers under off-the-plan contracts.
Feedback is being sought by the Have Your Say platform on proposed changes to off-the-plan contracts for homes and land in NSW.
These potential changes aim to guide new housing development, provide stronger consumer protections, and prevent delays that leave buyers out of pocket.
Minister for Customer Service and Digital Government, Jihad Dib, emphasised the importance of these reforms in providing certainty for home buyers.
“Buying a home is one of the most stressful experiences for an individual, these proposals are designed to provide greater certainty and consistency,” he said.
“This review is about making sure home buyers have the right protections and information they need to make informed decisions.”
Off-the-plan contracts involve purchasing properties that are yet to be constructed or subdivided, often without the opportunity for buyers to inspect the property beforehand.
The contracts may be used for purchasing a proposed lot within a strata or community land scheme or for buying land in a conventional subdivision.
Dib highlighted the role off-the-plan contracts play in the housing market.
“Off-the-plan contracts play a crucial role in supporting essential housing supply initiatives in NSW. They allow buyers to purchase property early in the development process, while giving developers the confidence and financial security to build.”
The NSW government proposed changes to the off-the-plan contracts, aiming to provide greater certainty for home buyers by introducing clearer deadlines for when they can move into their new homes.
These reforms also seek to unlock development sites more quickly by removing outdated restrictions, including obsolete restrictive covenants on land titles, which can limit how land can be used or developed.
To further prevent delays on construction completion, the NSW government is considering mandatory sunset clauses.
These clauses will require developers to disclose construction milestones, limit their ability to extend deadlines, and allow buyers to withdraw if progress does not occur within a set time frame.
Dib acknowledged that while most developers operate fairly, stricter regulations are needed to prevent unethical practices.
“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,” he said.
The reforms can potentially hold developers accountable by introducing penalties for failing to meet deadlines or taking insufficient steps to deliver homes.
Dib said these changes will improve transparency and encourage timely project completion.
“These proposals are about encouraging developers to be upfront about timelines and challenges to assist home owners.”
Approximately 5 per cent of the 180,000 residential purchases in NSW last financial year involved off-the-plan contracts, allowing buyers to buy a property before construction is completed or the land is officially subdivided.
Reforms are intended to reduce uncertainty for buyers and prevent developers from unfairly profiting from delays or canceled contracts.
Registrar general, Danusia Cameron, stressed the importance of providing buyers with sufficient safeguards.
“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.”
She added that the laws must evolve to meet community needs and maintain confidence in the process.
“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.”
The Office of the Registrar General has released the discussion paper, Contracts and Covenants: Reforms to Support Development of Land, to outline reform options.
The NSW community is invited to share their feedback on the proposed changes through the NSW government’s Have Your Say platform.
The Contracts and Covenants consultation is open until 7 March 2025, and will inform legislation set for development in 2025.