With a residential property boom comes the inevitable residential development boom of strata title apartments.

You “buy off the plan” when you pay a deposit and agree to purchase most commonly a unit in a strata title complex that is not yet built or is in the very early stages of being built.

Off the plan contracts usually have a specific sunset clause incorporated in their terms.  This is a clause which states that the unit must be completed by a certain date.  It is usually drafted in such a way that if the unit is not built by this date, the parties can bring the contract for the sale of the unit to an end and the deposit is refunded.

There have been concerns that vendors/developers are deliberately delaying projects, relying on the sunset clause and then reselling the unit to someone else.  The time periods in these sunset clauses can be several years and by the time the unit is completed its value has increased, particularly if the city is in the midst of a property boom.

The government sought public feedback through an online survey through the Fair Trading website in an effort to consider appropriate reforms to deal with this type of behaviour.  Reforms would need to address the issue from both a vendor/developer and purchaser perspective.  Naturally in a property downturn where the purchaser had entered the contract in a property boom, the purchaser would be very keen to acquire the newly build unit at the current  market value which could be less than what they contracted to buy it for.

It will be interesting to see what reforms the Government comes up with.

Stay tuned.