It has been widely reported in the media that the Brisbane off-the-plan unit market is already in oversupply and that the situation will worsen heading into 2017. The downturn in market conditions could not have come at a worse time for many foreign buyers as the big four banks also substantially reduced lending to foreign investors earlier this year.
Deposits at Risk
Buying an off-the-plan unit can be a profitable proposition in a market of rising property prices. However, in a market that is already in oversupply it can also be a risky business. This risk has been amplified for foreign buyers due to our big four bank’s loss of appetite for foreign lending. It is no secret that the last few years have seen a steady increase of Chinese investors in the Australian unit market . Many of those buyers may now struggle to secure finance with Australian banks and have to look elsewhere for funding.
What are the options if a buyer cannot secure finance?
There are limited grounds upon which a buyer may terminate off-the-plan contract including the following:
- Misleading and deceptive conduct
- Failure to disclose
- Changes/Variations to disclosure statements
- Developers failing to complete construction before the sunset clause
Exercising rights to terminate
When a buyer is considering whether to terminate an off-the-plan contract it is important to seek legal advice as soon as possible. Pursuant to the Body Corporate and Community Management Act 1997 (Qld) buyers may terminate off-the-plan contracts if they would be “materially prejudice” if compelled to complete the contract in circumstances where the seller’s disclosure statement was inaccurate. However, termination must be in writing and notified within the prescribed period in the Act. Of course not all inaccuracies in disclosure statements will amount to material prejudice and it a very much a matter of degree that is determined by the facts of each case.