Off-the-Plan Projects, Covenants in NSW’s Sights

Planning reforms in NSW are ramping up in the lead-up to the Building Bill release with the latest aimed at off-the-plan projects and outdated covenants.

Developers could face financial penalties for failing to deliver homes and unfairly profiting from buyers under reforms being considered by the NSW Government.

About 5 per cent of 180,000 residential purchases in NSW last financial year were off-the-plan.

The reforms could include scrapping the ability for developers to draw the contract out with indefinite sunset clauses, which give buyers no clear path forward or the ability to exit the arrangement.

Mandatory construction timelines for buyers, penalties for inaction and giving buyers the option to withdraw after a certain time period are also being considered.

Simultaneously, the state is looking at making it easier to remove private, outdated agreements from land titles on development sites. 

Covenants bind future landowners indefinitely, even if they become outdated—for example, an obsolete covenant may prevent more than one property from being built on the land or ban the use of certain building materials.

Meanwhile, the new NSW building commissioner James Sherrard is finalising the Building Bill to streamline legislation across the state, which he expects to introduce later this year. 

This specifically looks at who can do building work, the standard of work applicable and how consumers would be protected. 

NSW customer service minister Jihad Dib said the contracts and covenant reforms were designed to provide greater certainty and consistency. 

“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,” Dib said.

“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.”

Consultation is open until March 7.