Still not enough! Proposed reform for NSW Off-the-Plan Contracts to better protect buyers!

19 DEC 2022


Off-the-plan Contracts have been a feature of the property market for many years, providing an alternative mechanism to a conventional property sale. It allows purchasers to commit to the purchase of a property before it has been developed or built, with an extended construction and settlement period of several years which can be beneficial, allowing them to save additional funds required for settlement.

Over the past 15 years, the number of residential properties purchased and sold off the plan has consistently risen. On average, off the plan sales represent around 6% of all residential property sales in NSW, with the average annual growth of off the plan sales being about 20% each year. 

Whilst legislation and major reforms introduced in 2019 designed to bring stronger protection for purchasers who buy property off-the-plan created a more transparent process and imposed a robust disclosure regime for developers, it is apparent that buyers are still exposed to vulnerabilities creating concerns and a further need to address emerging issues in the current market. Below is a table of the trend in off-the-plan purchases as opposed to residential purchases between 2018 and June 2022 suggesting that the current regime has not maintained purchaser’s confidence in the industry.


Comparison Number of off the plan and residential Property Sales between 2018-2022

Financial Year

Number of off the plan contracts for sale*

Number of residential contracts for sale*

2021-23 June 2022













2019 reforms to off the plan contracts

The Conveyancing Legislation (Amendment) Act 2018 (NSW) and the Conveyancing (Sale of Land) Amendment Regulation 2019 (NSW) introduced changes which took effect from 1 December 2019 through additional vendor disclosure obligations to provide purchasers of off-the-plan contracts with greater transparency, new remedies and stronger protections. In summary these changes:

  1. Provided a new and transparent disclosure regime to be implemented where developers of residential off the plan properties must provide a prescribed set of information;
  2. Allowing for an extended cooling off period of 10 business days;
  3. Required vendors to notify purchasers of ‘material particulars’ making original disclosures inaccurate adversely affecting the purchaser’s use and enjoyment of the proposed property; and
  4. Implanted a new purchasers’ remedy for changes to material particulars such as the right to Rescind or Compensation Rights.


Benefits and risks of off the plan contracts

Whilst we can acknowledge that the property market has been affected by the Covid 19 pandemic, off-the-plan contracts have still remained a popular means of purchasing and selling in NSW.

The benefit for purchasers is that they can secure a property on payment of a 5% or 10% deposit and use the construction period to save for settlement while the property is being built. For developers they provide certainty and assurance by allowing them to secure finance from their respective lenders in order to progress their ongoing projects to completion.

Off the plan contracts however are speculative and made in anticipation of a product yet to be created. For this reason, the process involves some risk some of which are:

  1. The decision to buy property being based on the developer’s plans, designs and specifications, rather than a finished property capable of physical inspection;
  2. Construction may be delayed, and settlement might not happen when the purchaser expects; and
  3. If completion of the building cannot happen by a particular date, the developer may seek to end the contract under a ‘sunset clause’.

There are benefits for both buyers and developer in purchasing and selling property off-the-plan however there is still room for transparency and off the plan purchasers have continued to remain vulnerable to the actions of developers who seem to continue to exploit this apparent power imbalance.


DEP Box Hill Case Study

The DEP Box Hill Pty Ltd (Box Hill) recent case study is a perfect example of the present risks purchasers continue to face despite the extensive changes and legislative reforms introduced in 2019.

DEP Box Hill Pty Ltd offered land for sale in the Futurity Rise Estate, at Box Hill to various purchasers. The land for sale was conditional upon the developer becoming owner of the land as well as obtaining development approval from the local Council. The contracts were also conditional on the plan of subdivision being registered before a certain date.

After 10 months from contracts exchanging with various purchasers, Box Hill was unable to acquire the land and did not have the relevant development approval and relied on the Contracts for Sale to rescind. Acquiring the land and obtaining development approval are not ‘sunset events’ – so are not covered by the current sunset clause protection offered by the new reforms.

The contracts were able to be brought to an end without the purchaser’s consent and without an order of the Supreme Court.

The affected purchasers were able to recover their deposits and any stamp duty paid. However, they had lost the opportunity to buy an alternate property for a similar price as the property market had considerably increased considerably.  


Need for Further Reform

The NSW Government, recognising the current issues still faced by purchasers buying properties off the plan is seeking feedback on the effectiveness of the disclosure regime offered under the Conveyancing Act 1919 and Conveyancing (Sale of Land) Regulation 2022.

A discussion paper released this month addresses emerging issues in this property sector by proposing the introduction of:


1. Minimum readiness requirements before residential land can be sold off-the-plan

A proposal to minimise risk for purchasers is to prevent the sale of off-the-plan residential property until the Vendor/Developer becomes the registered proprietor of all of the development site.

By prohibiting the sale of property off-the-plan prior to the vendor or developer becoming the registered proprietor the Box Hill scenario could have been prevented.

Whilst this may provide more comfort to purchasers it could potentially be detrimental to developers and stopping them from being able to secure finance for future projects. This will in turn have a negative impact on the property market by further decreasing the housing supply to the public and as such setting timeframes around a developer’s acquisition (such as acquiring the land within 6 months from the date of exchange) is a better alternative provided the timeframes no not impose additional costs or barriers to the development.

To address some of the issues the following exemptions have been proposed for developer and purchasers:

Exemptions for Developers

Exemptions for Purchasers

  • Selling to another developer (ensuring completion of development;
  • Novation of the Contract for Sale (to allow transfer of development to third parties;
  • Entering joint venture with another entity
  • Negotiating to buy an area of closed road
  • Flexibility to novate or on sell the property if finance cannot be obtained.
  • Change of Purchasing Entity
  • Addition of a second purchaser (ie family member)
  • Flexibility to negotiate purchase price (ie valuation revealing lower property value)

An additional proposal is that which would require developers to have made a development application or have obtained development consent for development plans relating to a specific stage of the subdivision prior to being able to sell the land as a precondition. This will again have financial implications on developers making it nearly difficult for developers to advance projects. The reforms need to consider both parties prior to imposing such obligations.


2. The need to further enhance disclosure requirements for off-the-plan contracts by.

In the event that the developer is not the registered proprietor of the land prior to offering the land for sale, it is proposed that an additional disclosure should be made as to this. Disclosing to buyers any additional agreements that may be in place which will allow the Vendor/Developer to acquire the land has also been proposed. This disclosure would be required to be made within a specific period of time and failure to disclose would allow the purchaser to rescind the Contract.

Whilst this as well as the proposed introduction to enclose a Statutory Warning Statement in the Contract for Sale would minimise risks for purchasers, the effectiveness of it is questionable and it would fail to address the ssues we face with the already oversized Contracts for Sale of off-the-plan properties.

Consideration is also given, which would also address the increasing size of these type of contracts is that the existing Disclosure Statement could set out additional information in relation to strata properties such as;

                          i.    Details of common property shared facilities that would attract ongoing costs;

                         ii.    Estimate of owners contribution towards common property expenses; and

                        iii.    The services that are being provided to the property.


3. Imposing penalties for developers who offer to sell residential land off-the-plan without appropriate disclosure

Imposing penalties on developers for non-compliance with any disclosure requirements such as making a Vendor/Developer’s failure to meet any conditional sale regulations pursuant to the Conveyancing (Sale of Land) Regulation 2022 an offence. Whilst this will require amendments to legislation which is very timely, it may propose a solution to ensuring purchasers are protected and forcing compliance.


4. Expanding existing sunset clause protections to include conditional events such as the need for approval and property being acquired by a specific date

Sunset Clauses in off-the-plan contracts impose timeframes on events such as registration or the issuing of an occupation certificate allowing either party to rescind or terminate should the specified event not happen by the specified date.

Whilst the reforms have extended the definition of a sunset event to include the issuing of an occupation certificate additional to the registration of the plan additional protection is recommended so as to avoid instances where developers can rely on other carefully drafted special conditions in order to rescind similar.

A proposal to further extend the definition of a ‘sunset event’ to capture the following has been made:


                          i.    The vendor/developer becoming the registered owner of the land/property within a certain prescribed period;

                         ii.    The vendor/developer having lodged a development application and having obtained development consents; and

                        iii.    The vendor having lodged the relevant plan(s) of subdivision for registration.


5. Solutions to address the increasing size of off-the-plan Contracts for Sale

The large size of the Contracts for Sale for off-the-plan properties in NSW is concerning however it does not outweigh the risk purchasers are faced. The multiple disclosure documents not only assist with the due diligence process of legal practitioners acting for off-the-plan purchasers but also allow for full disclosure of all matters relating to their specific property and  provide some comfort as well as transparency regarding their proposed purchase.

The most appropriate way to address the size of off-the-plan contracts is by making the previous suggested enhancements to the Disclosure Statement.



Whist the above mentioned are proposed changes yet to be implemented or even considered from a legislative perspective, it is a way forward in acknowledging the need for further reform by strengthening consumer protection law in favour of both developers as well as purchasers buying off-the-plan properties in NSW.


The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.


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