South Australia to Introduce Laws Protecting Homebuyers from Sunset Clause Misuse

Legislation to stop homebuyers being left high and dry by developers misusing sunset clauses in contracts will soon be introduced to SA parliament.

Under current arrangements, sunset clauses allow both parties to terminate contracts if homes are not completed by an agreed date, but can be misused — allegedly by developers who want to cash in on rising property values.

The SA government says it will conduct consultation in the coming weeks and wants to introduce legislation to parliament by the end of the year.

South Australian homebuyers could soon be protected from "sunset clauses" that allow housing developers to terminate contracts for off-the-plan properties, the state government says.

The move comes after the government vowed to consider legislative options when a developer axed 75 contracts with homebuyers in Gawler East.

Under current arrangements, sunset clauses allow developers as well as homebuyers to terminate contracts if homes are not completed by an agreed date.

In some cases they can be misused — allegedly by developers who want to make a larger profit when property values increase.

The SA government said it would introduce legislation to parliament by the end of the year to prevent developers from misusing the clauses.

The proposed reforms would prevent a developer from triggering a sunset clause unless it had the consent of the homebuyer, or if the Supreme Court ruled that such a step was "just and equitable", the state government said.

"They'll need to go to a court and ask the court to rule that it's appropriate they use the sunset clause," Consumer and Business Affairs Minister Michael Brown said.

"The message we want to send to the developers is 'if you want to come to South Australia and develop and provide housing for people and, yes, make some money while you're doing it, then we're happy to work with you'. But if you want to come here to rip people off, we're not interested and the law will come down on you."

The move comes amid significant housing development across Adelaide, and follows similar steps in other states including New South Wales and Queensland.

Mr Brown said its latest legislation push followed property developers Wel.Co axing 75 contracts at a Springwood Estate housing development in Gawler East.

He said that while that particular situation had largely been "rectified", there was still a need to strengthen consumer protections.

"It's unfortunate it took media attention and also the government to step in to get Wel.Co to end up where they did," he said.

"That's one of the reasons why we're changing the legislation — to make sure we don't end up with a Wel.Co style problem again."

In response, the developer said the situation at Springwood "arose following significant changes to planning and infrastructure requirements affecting the project".

"These were complex circumstances, and Wel.Co has continued to work closely with government, council and affected purchasers to identify pathways forward," Wel.Co said.

"Our focus remains on working constructively with all parties to achieve the best possible outcomes for purchasers and progress the delivery of Springwood."

The minister said the government would conduct consultation in the coming weeks.