VICTORIAN DEVELOPERS BANNED FROM USING SUNSET CLAUSES TO RIP OFF HOME BUYERS
- Posted By Prince Lakshman
Owning your dream home is now within your reach now that developers in Victoria are finally banned from using the infamous sunset clause. A buyer’s consent is now needed in order for developers to cancel a contract of sale. The ban would mean the end of the practice developers use to intentionally delay developments, voiding contracts, and reselling properties at an inflated price.
The use of sunset clauses has made it difficult for families to own their dream home, with some expressing that the application of the clause had “shattered” them.
According to Consumer Affairs Minister Marlene Kairouz, the new law will give families and young people peace of mind when investing in the often-intimidating property market.
The controversial practice was officially outlawed when the changes to the Land Sale Act was passed this month in State Parliament.
The government was made aware of the issue affecting apartment and house and land buyers through stories published on Domain and in The Age.
In order for a developer to take advantage of a sunset clause, they would now be required to get consent from the buyer or the Supreme Court.
Victorian executive of Property Council of Australia Cressida Wall questioned the need for the changes, noting that Melbourne’s now weak property market meant prices would not rise enough to make clawing back a property worthwhile for a developer.
“While we are generally supportive of the consumer protection measures proposed by this bill, market conditions that exist now need to be considered against those which existed when the policy was first proposed,” she said.
“This policy was developed at the height of a rising residential market, when some developers may have sought to ‘flip’ contracted purchasers for financial benefit.
“The market has changed considerably since and the risk of this occurring now is minimal.”
Ms Wall was concerned the new laws would cripple businesses.
“It is important that this bill does not prevent companies from rescinding contracts for genuine purposes, such as a repositioning of a project to ensure its ongoing viability,” she said.
The clauses gave developers whose projects were acceptably delayed to hand back deposits and place the properties back on the market at a higher price. There are also instances that developers ask the buyers for more cash to make up the difference in what they paid and the rising current market value.
Other amendments to the act included increasing what a vendor or agent is required to disclose to buyers such as murders at a property, banning rent-to-buy agreements, and banning auctions before 1pm on Anzac Day.