John Darley, Advance SA MLC (5AA 9.35-9.41) Concerns with buying new apartments off the plan / Proposal to apply stamp duty exemptions for all new house and land packages sold
(Byner: I want to go back to something that we have been talking about now for a long time … in the last three to four days there’s been some extraordinary revelations about the lack of quality in a large building in Sydney that houses hundreds of people … many have bought investment properties or where they live themselves for a lot of money … it seems that the amount they’ve paid is well over what it’s really worth … these suspicious standards and quality issues are not just to do with that building, they affect a lot of people in every state … last night on A Current Affair … they had footage taken whilst the building was being constructed where it appeared that people involved in building it knew there were problems before they even got to the end point where it was ready … in the last three to four days anybody that might be contemplating buying a unit off the plan particularly in a tall building is probably going to have rocks in their head, but here’s the rub … John Darley … gave me a call yesterday and he said, “Leon, you know that the previous Government they gave stamp duty holidays, if you like, to people who were buying properties off the plan” … let’s hear the rest of the story from John … tell us what you told me yesterday?)
… I mentioned that back in 2015 when the State Government gave an exemption from stamp duty for any apartment bought off the plan I suggested to the then-Treasurer perhaps it should be extended to stamp duty exemption for any house and land package bought in South Australia and he said to me, yeah, that he thought that was a good idea but nothing came of it … at that time I took out some … stats on the effect of resales of apartments that had been bought off the plan … at that point in time over the previous … five year period of the apartments bought off the plan, 40% on resale lost money and a further eight percent of purchasers got their money back but they lost on cost … then in … the end of September 2017 I did the same exercise and at that stage for the previous five years 22% of all apartments bought off the plan … when they resold, sold for less than what they paid for them and a similar amount, eight percent, got their money back but lost on cost … we’re aware of the fact that the building industry, building approvals have been down for the last two quarters … I’ve resurrected my idea that I think stamp duty exemption should apply to any house and land package built and sold in South Australia.
(Byner: What is your take now that in the last few weeks … we’ve got these buildings whose owners … the one example that’s often used is a bloke spent $830,000 and he now likely couldn’t sell it for half … somebody offered him a dollar, so where does that put this whole rebate system?)
… that adds a further complication as to the integrity of the building construction itself apart from what I’ve been talking about is the natural fact where a person buys an apartment off the plan and then sells it at some later stage … a number of those people have lost money, but … the situation in Sydney with that apartment block … is a matter of the building integrity, the construction integrity … that just adds a further complication … any person contemplating buying an apartment off the plan would have to make sure that the … construction of the property was in compliance with the regulations.
(Byner: And in order to do that you’re going to need a fair bit of documentation aren’t you?)
Are you ever and you’re going to need a professional to do it for you … the question is … buyer beware as it is in all cases but in cases of apartments that are being built you need to make sure that the building’s going to stay there.
(Byner: … thank you …)