New Changes to ‘Off the Plan’
Significant changes to off the plan sales in Queensland will happen if the Land Sales and Other Legislation Amendment Bill that was recently introduced to Queensland Parliament is passed.
Some of the most important of the changes proposed in the new bill are:
Developers will be able to sell land “off the plan” before the developer has a development approval (DA) from the local government
- Currently, for most development work other than very simple boundary re-alignments, a +developer must have final engineering plans approved an operational works approval (Op Works) before the developer can offer to sell land off the plan.
- The proposed change will allow developers to market and contract to sell land off the plan subject to the developer obtaining the necessary DA’s.
- Flatland developers will now be able to use pre-sales to gauge market acceptance before incurring the significant costs of obtaining DA and Op Works approvals.
- Flatland developers will have the same marketing advantages a strata developer currently enjoys.
Increase in maximum deposits to 20% of Sale Price
- The current restriction on the maximum deposit permitted under the Land Sales Act for the sale of flat land (10% of the Sale Price) will be removed. Interestingly, there is no similar restriction on deposits for off the plan sale of strata developments.
- It will now be possible to take deposits of up to 20% of the sale price without triggering the installment contract provisions under the Property Law Act.
- Developers have complained that buyers, particularly overseas buyers, were prepared to walk away from long-standing sales contracts with 10% deposits if there was a significant slide in market prices (as happened post GFC).
- It is expected that the security of larger deposits will improve financial viability for funding large off the plan developments.
Changes to disclosure requirements:
- Developers of flat land will not have to provide a buyer with a copy of the overall plan the development approved by the local government as part of the DA. A ‘disclosure plan’ must still be given by the developer, but the current requirement will not be practical as off the plan sales will be possible before the DA is issued.
- Developers of strata lots will have additional detail regarding what it means to ‘identify’ a proposed strata lot. It will be necessary to ensure that disclosures appropriately identify a proposed strata lot.
- Flatland developers will no longer have to disclose the contour levels that exist before the Op Works occur. Developers will still need to disclose information about the development earthworks, including details about the areas of the land to be cut or filled, the depth of the fill and compaction rates, and any retaining walls to be built. Flatland developers will still need to provide contour maps showing what the surface contours will be at the completion of Op Works.
- If an initial disclosure made by a developer becomes inaccurate, the developer will need to clarify the inaccuracies and will need to explain in plain English the inaccuracy being corrected in the further statement. It will not be sufficient simply to issue an updated disclosure statement.
- All developers must give further statements (correcting an inaccuracy in the disclosure statement/disclosure plan) to buyers at least 21 days before settlement occurs, and buyers will then have 21 days to terminate the contract if the buyer is materially prejudiced by a variation.
Automatic exemption for developers of less than 6 lots of flat land
- Developers of 5 lots or less of flat land will no longer have to apply to the Office of Fair trading for exemption from the disclosure and trust account provisions of the Land Sales Act.
- Some developers of small flat land developments were accidentally caught out and had their contract made unenforceable simply because they did not apply for exemption in time
- The current process of applying for the exemption for small developments will no longer be required and developments of flat land comprising 5 lots or less will automatically be exempt.
Please contact Tony Randall