Buyers who have purchased off-the-plan apartments in Victoria which are scheduled to be completed this year may face losing their deposits due to new policy.
A policy created by the big four banks in line with new design standards will see the banks refusing to lend for one-bedroom apartments smaller than 50 square metres, which will affect buyers who have already secured pre-approval for an off-the-plan apartment which no longer passes the requirements.
Under the new policy, buyers who had secured pre-approval for funding on a property smaller than 50 square metres stand to lose their deposit as their approval is revoked.
iBuyNew CEO Mark Mendel is arguing that this isn’t fair to buyers and that a change in policy post construction shouldn’t affect approvals already secured.
“If banks are prepared to fund a development for construction then they should take the same stance on providing finance when it comes to the buyers of those off-the-plan apartments,” said Mr Mendel.
“Many Melbourne apartment projects due to be completed in 2017 were designed in 2014 or prior, before the discussions about the new design guidelines had even been made public,” he said.
As such, he believes the banks should be offering buyers of those apartments the same policy that existed when construction initially began on the building.
“Buyers of off-the-plan apartments should be able to go to the bank that funds the construction and take out a pre-approval that will last them until settlement,” said Mr Mendel.
“This reduces a part of the risk for the buyer as they don’t have finance risk. It also reduces problems for the developer as they don’t have settlement risk and overall it’s a win/win situation for the bank,” he said.