Canberra home buyers welcome law reform after having townhouse contracts cancelled by 3 Property Group

Two bills were introduced to the Legislative Assembly on Tuesday, both titled Civil Law (Sale of Residential Property) Amendment Bill 2021, to better protect off-the-plan property purchasers from having their contracts cancelled.

The proposed changes come after several Canberra buyers had their off-the-plan townhouse contracts cancelled by developer 3 Property Group, before the same properties were relisted for a higher price.

Reece Peart and Brayden Abbott signed a contract in November 2020 with 3 Property Group for a townhouse in Throsby. Prior to receiving a rescission notice this year, their future home was listed for sale for $200,000 more.

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Mr Abbott said the proposed legislation change was good news for future off-the-plan buyers.

"It's about time, I just wish that it had have happened earlier, so that there was something in Canberra to protect home buyers, especially first home buyers, [prior to now]," he said.

Mr Peart said the situation has been stressful for the couple and he hoped the law reform would mean developers "can never do this again".

In presenting his bill to the Assembly, Attorney-General Shane Rattenbury said the amendments would regulate "how certain problematic rescission clauses in contracts for the purchase of off-the-plan property can be used".

Under the bill, a developer would only be allowed to rescind an off-the-plan contract if the buyer had consented in writing, by order of the Supreme Court or in circumstances prescribed by regulation.

A Supreme Court order would take into account a number of factors including whether the seller had acted unreasonably or in bad faith and what reasonable actions were taken to avoid a rescission event.

The bill would be applied to contracts already in place at the date of its introduction to the Assembly, November 9.

Mr Rattenbury said retrospective effect was generally avoided in legislative reform, but was justified in this instance "given the need for urgent consumer protections to be put in place in order to respond to real-time changes within the property market".

"I am also concerned of the potential for opportunistic rescissions to occur in the gap between introduction and passing of the five amendments if the provisions were not applied retrospectively," he said.

"Canberrans who are currently party to an off-the-plan contract can have confidence that they will have access to the improved consumer protections provided by these reforms."

Liberal member for Ginninderra Peter Cain introduced a similar bill on Tuesday. His bill refers to rescissions under "sunset clauses" only, and would apply to off-the-plan contracts entered into on or after the bill's commencement date.

In his Assembly speech, Mr Cain criticised the government for "ignoring warning signals" of similar instances of cancelled contracts in NSW, which led to law reform in 2015.

Mr Cain expressed "a real disappointment that the losses of some 100-plus purchasers in the ACT in recent times through the malpractice of a small part of the developer community ... could easily have been avoided".

Debate on both bills was adjourned until the next sitting date.

Master Builders ACT chief executive Michael Hopkins hit back at the proposed law change, saying the government had failed to engage with key stakeholders and future buyers were "likely to pay the price" of the new rules.

"No developer will proceed with an unviable project, so rescinding contracts and going back to the drawing board is preferred to starting a project and going broke mid-construction," he said.

"The government's failure to consult with developers, builders and financiers will mean that there will be unintended consequences of these laws, which will ultimately result in higher unit prices."

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For Mr Peart and Mr Abbott, a class action led by Adero Law is their only hope of receiving compensation for their loss.

Rahul Bedi, senior associate at Adero Law, said the firm planned to file a series of applications on behalf of its clients by the end of November, and would also obtain a court order for 3 Property Group to produce "documents and evidence which hasn't been forthcoming to date".

After being forced to expand their property search beyond Canberra due to rising prices, Mr Peart and Mr Abbott have found a new home in NSW.

"We just physically cannot afford anything in Canberra right now. With all the increases with the thresholds for first home buyer's and first home builder's [grants], we just don't meet them any more because property [prices] have gone up $200,000 and over - it's just impossible to reach that," Mr Abbott said.

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