Protection From Dodgy Developers! Victorians buying off the plan properties, including house and land packages and apartments, will get greater protection from dodgy developers under new laws to be introduced to state parliament. Changes to legislation will make it tougher for developers to deliberately delay their projects by not registering land titles by set dates before terminating sale contracts to take advantage of rising land prices across Melbourne. They have been using existing laws to “claw back” the land, returning deposits and on-selling it for a much higher price, or asking the original buyers for more money based on its current value.
The dodgy practice being used by some developers involves using a “sunset clause” which allows them to terminate a contract of sale if the subdivision of land or strata lots is delayed. Under current laws buyers are also able to terminate the contract if these timeframes are not met. But, under changes to the Sale of Land Act, off the plan developers of housing estates and apartment blocks will need the permission of land or apartment buyers, or the Supreme Court, to enact these sunset clauses. Consumer Affairs minister Marlene Kairouz, who is set to introduce the changes for a first reading on Wednesday, said the changes would ensure developers were unable to take advantage of those buying off the plan. This included new house and land packages mainly being bought by vulnerable first-home buyers in Melbourne’s outer ring suburbs. The government was made aware of the issues after stories appeared in Domain and The Age. “We’re taking action to make sure that Victorians aren’t being ripped off by dodgy developers – the days of misusing sunset clauses to make super profits are over,” Ms Kairouz told Domain on Tuesday.
“This is about improving consumer protections and restoring balance so that hard-working families can enter the property market with confidence.” The new laws will be backdated to August 23 last year — from when the legislation was first announced — meaning any landowners who have had sunset clauses enacted on that date or after, are able to stop the developers from clawing back the land. The legislation changes come after NSW in 2015 moved to similarly change its sunset clause laws after a number of issues.
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The problem has been widespread; Consumer Affairs Victoria received 64 complaints in 2018 about dodgy sunset clauses, mostly in Melbourne. More complaints were received directly by lawyers.
“I congratulate the state government for bringing it in and with the retrospective date,” Mr Benjamin said. “It’s timely that it’s done because if the economy starts to pick up again, which it may do after the May [federal] election, developers will take advantage of that,” he said.
Solicitor with Michael Benjamin & Associates Michael Benjamin welcomed the news of the changes to legislation.
Last year, Mr Benjamin represented four Keysborough landowners who had bought into the Green Village Property Development over the issue.
Mr Benjamin has represented a growing number of clients affected by sunset clause clawbacks across Melbourne.
They bought land off the plan in 2015 for between $362,000 and $409,000. Several blocks in the development sold for $630,000 in