Developers could face financial penalties for failing to deliver homes and unfairly profiting off buyers under reforms being considered by the NSW Government.

Feedback is being sought on stronger protections for consumers in off the plan contracts for homes and land in NSW, to guide the delivery of new housing and prevent lengthy delays that leave people out of pocket.

An off the plan contract is an agreement for the sale and purchase of a property that is yet to be developed or constructed. These contracts can apply to the sale of a proposed lot in a strata or community land scheme or to the sale of land in a conventional subdivision.

The reforms are being designed to help increase housing supply by providing greater certainty and clearer deadlines for home buyers and to free up land for development faster by removing outdated restrictions on development sites.

The reforms are intended to help more people achieve the Australian dream of home ownership and build greater confidence in the housing market by improving protections for buyers and preventing developers from delaying homes they have been contracted to deliver.

About five per cent of 180,000 residential purchases in NSW last financial year were off the plan contracts which allow a buyer to commit to purchasing a property before the complex is built or land is subdivided.

Potential reforms being released for comment aim to tighten contract rules to give buyers a clearer understanding of when they can expect to move into their new home, reducing uncertainty and the risk of being left behind in the market when a contract is cancelled.

This could include scrapping the ability for developers to draw the contract out with indefinite sunset clauses which give buyers no clear path forward, or ability to exit the arrangement.

Other proposed changes the NSW Government is considering include:

<ul>
	<li>Making sunset clauses mandatory in contracts so that buyers can withdraw if sunset events do not occur by a set time</li>
	<li>Requiring developers to disclose the status of the development against construction milestones so buyers have a better understanding of timeframes and potential risks</li>
	<li>Limiting a developer’s ability to extend sunset dates only for certain reasons beyond the developer’s control such as weather or supply issues, and imposing time limits on extensions</li>
	<li>Requiring developers to take reasonable steps to meet dates by potentially introducing penalties for inaction.</li>
	<li>The Government is also looking at unlocking potential development sites by making it easier to remove private, outdated agreements from land titles (known as obsolete restrictive covenants) which can limit how land is used or developed.</li>
</ul>

Covenants can continue to bind future landowners indefinitely, even if they become outdated – for example, an obsolete covenant may prevent more than one property from being built on the land or ban the use of certain building materials.

To support the reforms, the Office of the Registrar General has released a discussion paper called ‘Contracts and Covenants: Reforms to support development of land’ outlining the options.

The community is invited to respond to survey questions or upload a submission on the reform proposals and share their experiences on the NSW Government’s Have Your Say platform.

The consultation will lay the groundwork for legislation to be developed in 2025.

The Contracts and Covenants consultation is open until 7 March 2025.

Minister for Customer Service and Digital Government Jihad Dib said these proposals are designed to provide greater certainty and consistency.

"This review is about making sure home buyers have the right protections and information they need to make informed decisions.

“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.”

“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.

“These reforms are designed to provide greater transparency as well as encourage the delivery of new homes. These proposals are about encouraging developers to be upfront about timelines and challenges to assist homeowners.”&nbsp;

“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.”

Joel Robinson

Off the plan contract laws under review to provide greater certainty to buyers

Three years ago, credit reporting giant Equifax identified a need to provide transparency to the development market in Australia.

In 2022 they launched iCIRT, a voluntary rating tool in which developers, builders and construction consultants all over Australia could apply to become a credited iCIRT rated company.

Since then the likes of Sekisui House, Stockland and Deicorp have all become an iCIRT rated developers.

We recently caught up with Brad Walters, Head of Product and Rating Services at Equifax, to talk more about iCIRT.

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<h2>What is iCIRT?</h2>

iCIRT stands for the&nbsp;Independent Construction Industry Rating Tool.

iCIRT ratings were developed in consultation with the government, regulators, industry and market associations to help purchasers find trusted residential building professionals.

<h2>How does it help buyers?</h2>

"iCIRT was designed to support and improve transparency and to provide buyers and investors with independent information that they can turn to that could give them confidence," Walters says.

The iCIRT rating system is voluntary for any developer, builder or construction consultant&nbsp;in Australia.&nbsp;

The process of becoming iCIRT-rated involves Equifax undertaking a detailed assessment of the company, from previous developments and experience to financial records and company structure.

Following the assessment, Equifax provide an iCIRT rating for the company between zero to five stars - the more starts, the more confidence in the developer.

A 3-gold star rating or higher indicates a trustworthy business with a demonstrated ability to honour its commitments and fix defects.

<h2>How do I find iCIRT-rated businesses?</h2>

iCIRT has a register&nbsp;<a href="/news/nsw/how-icirt-is-changing-the-off-the-plan-industry-for-the-better-the-sydney-developers-to-first-secure-the-accreditation">of all property professionals</a>, including developers and builders, who are iCIRT rated.

Some 130 companies now have an iCIRT rating.

Michael Bird

How iCIRT is helping build confidence in the off the plan apartment market

The builder-developer model isn't new.

Some of Queensland's best developers have been vertically integrated builder-developer for decades.

The challenging construction environment on the Gold Coast, characterized by a substantial increase in apartment projects since COVID-19, along with limited labor resources and rising costs for materials and labor, has led some developers to adjust their strategies to incorporate construction as part of their core service.

The likes of <a href="/developers/morris-property-group">Morris Property Group</a>&nbsp;and <a href="/developers/mosaic-property-group">Mosaic Property Group</a> have had their own building arm for years. They've created the blueprint that a lot of developers on the Gold Coast are looking toward.

[smartcode_project:default project_id=112024 project_image_fid=286004]

<a href="/developers/siera">Siera Group</a>, who made the move from Brisbane to the Gold Coast a few years ago, has for a long time had construction in-house when building luxury townhouse developments across Brisbane's inner ring. They've now decided to do the same at <a href="/new-apartments/tapestry-chevron-island-39-darrambal-street-chevron-island">Tapestry on Chevron Island</a>.

<a href="/developers/marquee">Marquee</a> Development Partners have brought construction in-house for <a href="/new-apartments/la-belle-palm-beach-332-the-esplanade-palm-beach">La Bella Palm Beach</a>, as have <a href="/developers/iris-capital">Iris Capital</a> for its $1 billion Broadbeach development <a href="/new-apartments/victoria-albert-broadbeach-20-albert-avenue-broadbeach">Victoria &amp; Albert</a> and Steer Developments for its <a href="/new-apartments/c-te-palm-beach-3-thirteenth-avenue-palm-beach">COTE Palm Beach</a> project.

[smartcode_project:default project_id=108641 project_image_fid=192961]

Antonio Mercuri, who heads up site amalgamation specialists GV Property Group, says a key point the team look for&nbsp;when selling a site is if the buyer (developer) has a genuine track record of finishing their projects.

“If you see a high or midrise under construction on the Gold Coast at the moment, chances are, they’re a builder-developer,” Mercuri says.

“It's been a trend in the past couple of years, and very much so in the past 12 months.

“There are so many builders collapsing in Queensland at the moment under that rising cost of construction, and that’s leaving limited competition in the market.&nbsp;It’s forcing a change and as a result, many developers have started building themselves. They’re the ones delivering on these projects - it’s no coincidence."

[smartcode_project:default project_id=102340 project_image_fid=273593]

Mercuri says if someone is looking to buy off the plan, they should do&nbsp;their homework and check if they’re either a builder developer, or in the least, have a builder who they’ve worked alongside in the past.

&nbsp;

“It’s devastating for a buyer who’s handed over a hard earned deposit, only to be told their apartment simply isn't being built.

“Ideally, the project goes up and their unit appreciates in value but that’s not always the case.”

Antonio Mercuri, who heads up site amalgamation specialists GV Property Group, says a key point the team look for when selling a site is if the buyer (developer) has a genuine track record of finishing their projects

The growing trend of the builder-developer, and why it impacts the Gold Coast off the plan apartment market more than most

Prominent national property developer&nbsp;Sekisui House Australia&nbsp;has secured a 4 Star Gold Star rating from the Independent Construction Industry Rating Tool (iCIRT).

The iCIRT rating system is an initiative driven by the NSW Building Commissioner to improve transparency within the industry by assessing their experience and capability, aiming to enhance public trust and market transparency for home buyers. The distinction of a 4-Gold Star rating positions Sekisui House as one of the leading developers in the NSW, aligning with the company's dedication to creating high-quality, sustainable communities.

Hide Seguchi, CEO of Apartment &amp; Mixed-Use Developments at <a href="/developers/sekisui-house-australia">Sekisui House Australia</a>, said the 4-Gold Star iCIRT rating is a reflection of the team's hard work and steadfast dedication to excellence.

"It affirms our commitment to integrity and sustainability, which are the cornerstones of our community-building philosophy," Seguchi said.

"The certification will strengthen the confidence our customers have in us, reinforcing our position as a trusted leader in the industry.”

The iCIRT rating rigorously evaluates developers and builders across six critical criteria: character, capability, conduct, capacity, capital, and counterparties. Sekisui House’s 4-Gold Star rating is supported by its impressive track record in Australia, operational transparency, solid customer relationships, strong partner and supplier networks, and extensive technical expertise and engineering proficiency within the team.

“This iCIRT rating plays a vital role in the property market in NSW for both homebuyers and the industry,” Seguchi added.

“It provides buyers with the assurance they need when making one of the most important decisions of their lives. Our high iCIRT rating is a testament to our ability to construct homes and communities that stand the test of time. We encourage all potential homebuyers to incorporate the iCIRT rating into their property research process.”

Sekisui currently has a number of multi-residential projects in both New South Wales and Queensland.

[smartcode_project:default project_id=114215 project_image_fid=204853]

In Brisbane they're longtime, multi-award winning development West Village is drawing to a close. Having started developing the landmark Peter's Ice Cream Factory site in <a href="/new-apartments/west-end-qld-4101">West End</a>, Sekisui now have the final apartments available in the penultimate stage, The Allere Collection. They will then release the final instalment of the thriving mixed-use precinct, <a href="/new-apartments/callista-on-park-west-end-49-mollison-street-west-end">Callista on Park</a>.

Read more:&nbsp;<a href="/news/qld/first-look-exclusive-sekisuis-plans-for-west-village-final-tower-callista-on-park">First look exclusive: Sekisui's plans for West Village final tower, Callista on Park</a>

In Sydney they have their $1 billion billion masterplan in <a href="/new-apartments/norwest-nsw-2153">Norwest</a>, <a href="/buildings/the-orchards-lumia-norwest-104-fairway-drive-norwest-nsw-2153">The Orchards</a>, which is well on its way to becoming another thriving new community.

[smartcode_project:default project_id=111509 project_image_fid=191136]

They will be completing the third stage, <a href="/buildings/the-orchards-lumia-norwest-104-fairway-drive-norwest-nsw-2153">Lumia</a>, later this year, and have recently launched new releases <a href="/new-apartments/the-orchards-i-veue-central-norwest-104-fairway-drive-norwest-nsw-2153">Veue Central</a> and <a href="/new-apartments/sanctuary-wentworth-point-willow-release-11-wattlebird-road-wentworth-point-nsw-2127">Willow</a>.

The Turner Studio-designed masterplan will cover 1.4-hectares and when finished&nbsp;will comprise 1,300 apartments, extensive parklands, outdoor cinema, playgrounds, and a community centre.

They also have a $5 billion, 30-hectare project in Melrose Park North which will include around 6,000 new apartments, a new town centre and retail village, as well as a house and land project in Gledswood Hills.

Sekisui House Australia awarded 4-star rating under the independent construction industry rating tool iCIRT

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