Court finds ‘subject to finance’ is not an easy way out
Posted on Wednesday, May 15 2013 at 3:20 PM
A recent court decision has demonstrated the ‘subject to finance’ clause is not a simple path to exit from a contract of sale.
In
Hauff v
Anor v Miller [2013], the Court of Appeal found against the buyers, the Hauffs, who purchased a home unit
subject to obtaining finance from ING within seven days.
Kristy
Richardson, an associate professor at CQUniversity, says the buyer failed to
stay within the terms of the deal.
“The Hauffs did not make any attempt to
obtain finance from ING but their broker made application to a building
society. The building society could not approve finance by the nominated date
under the contract and, accordingly, the Hauffs terminated the contract on the
basis that they could not obtain finance,” Richardson says.
The sellers argued the buyers hadn’t
appropriately complied with their contractual obligations and brought
proceedings to keep the deposit, sue for damages and force the Hauffs to resell
the property.
“The Court of Appeal agreed… so on that
basis ‘no reasonable steps’ to obtain finance from ING, they had failed to
comply with the relevant clause of the standard contract.”
Richardson says the decision is a cautionary one.
“Under a contract of sale, you as a buyer will
be required to take ‘all reasonable steps’ to obtain the finance that you are
saying that you will under the contract.
“Also bear in mind that documents
supporting your attempts to obtain finance can be called upon to be produced by
the seller to support any contention by you that finance ‘has not been
approved’,” Richardson says.
Stephen Maule, partner and
property law specialist at Aitken Partners, says buyers should never treat
contractual clauses lightly.
“Our
advice would always be if this clause is in the contract, you must always
comply with it, and you need to comply with it in a timely and efficient
manner. If you don’t, you can be in trouble.
“Fundamentally,
apply for your finance, be diligent about it, give your bank everything they
need and if you get knocked back, tell us within the time period so we can tell
the other party,” he says.
Simon
Au, a selling agent with Remax Results Morningside, says agents are often anxious
about buyers’ attempts to get out of contracts due to the clause.
“Sometimes
the buyer is declining the contract not due to finance, but due to them now not
wanting the property any more – that’s a concern to agents, using the finance
clause as an excuse to get out of sale.”
“If the buyer signs
on a clause and they breach it, it’s really their fault. They are always asked
to consult with a solicitor,” Au says.
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Investors will benefit from purchasing in Sydney downsizing hotspots
Posted on Monday, May 13 2013 at 4:52 PM
Investors who buy smaller apartments in Sydney might dramatically benefit from a rising downsizing market, according to Urban Taskforce.
Chief executive
officer Chris Johnson says Sydney has the highest percentage of older people
who are likely to downsize and areas close to the CBD are the most popular.
“Suburbs in the
inner west like Strathfield, Ashfield and Marrickville have more than 20 per
cent of their population over 55 and as these baby boomers retire, many will
want to downsize into apartments in the same suburb,” he says.
“The over 65s
will double by 2050 and with better health care, many retirees will be looking
to downsize where they can lead active lives close to amenities. Our members
are seeing a growing trend towards more apartments being purchased by
retirees.”
Johnson adds
retirees like to be close to coffee shops, village centres and walkways. The
research was conducted by MacroPlan Dimasi for the Urban Taskforce, as well as
data from the 2011 Census.
A northwest
hotspot for the aged has emerged around Carlingford, Epping and Ryde, which all
have more than 25 per cent of their population over 55 at the last Census. The
coastal suburbs of Maroubra (25.2 per cent) and Randwick (20.8 per cent) are
contenders for more baby boomer downsizers, as well as the Hills District, with
Castle Hill (27.4 per cent) and Baulkham Hills (24.73 per cent).
Further north,
the Central Coast and the Pittwater council areas have more than 30 per cent of
residents over the age of 55 and are also likely to have large numbers of
retirees looking to downsize.
Johnson says
governments at state and local level should look at eliminating stamp duty for
genuine downsizers, allowing extra floor space to support more communal areas
and for councils to allow more zoning for apartments around transport nodes and
town centres.
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WA tenancy law changes ‘strike a balance’
WA tenancy law changes ‘strike a balance’
Posted on Friday, May 10 2013 at 4:07 PM
New laws will make renting fairer for tenants in Western Australia and also protect the interests of property investors, the State Government says.
Legislative changes will come into force on
July 1 and deliver a new framework covering agreements, security bonds,
property condition reports and tenancy databases.
Commerce Minister Michal Mischin says the
changes are important in the current rental market, which is characterised by
growing demand and constrained supply.
Rental application fees will be limited to
either $50 and $100, reducing upfront costs imposed on prospective tenants, he
says.
“The fees must be refunded within seven
days if an applicant is unsuccessful,” he says. “Also, tenants won’t be forced
to pay more than a fortnight’s rent in advance, which will help ease the
financial pressures of renting a home in WA.”
Property condition reports will now be
compulsory at the beginning and end of each lease period, aiming to reduce
disputes over the return of bond money.
Mischin says there have been numerous
complaints to the state’s Consumer Protection authority regarding the refund of
bonds.
“All new tenant security bonds will need to
be deposited with the Bond Administrator at the Department of Commerce, which
will release bond money according to the disposal arrangements agreed to
between the property owner and a tenant, or according to a ruling by a
Magistrates Court.
“Existing bonds will need to be transferred
upon renewal of the (current) tenancy agreement.”
A standard tenancy agreement will now be
available. They include provisions for minimum levels of window and door
security to ensure safety, he says.
Another change to the law surrounds the
issue of tenancy databases, which are sometimes used to check a prospective
renter’s history and assist owners in assessing applications.
“(The databases) will be more transparent,
with tenants given access to their information and a process to challenge
inaccurate or outdated information.”
The reforms were the result of consultation
with a variety of stakeholders and members of the community, he says.
“They will create a fairer rental market
that balances the rights and interests of both tenants and property owners.”
Information on tenancy laws is available at
www.commerce.wa.gov.au/renting
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Housing a big income earner for government
Housing a big income earner for government
Posted on Thursday, May 09 2013 at 11:26 AM
Nearly half of all tax revenue collected by state and local governments in the 2011-12 financial year came from the housing sector.
That incredible cash grab came at a time
when most property markets were in the midst of dramatically weaker conditions.
New analysis by research house RP Data
found property taxes accounted for 46 per cent of all income in 2011-12.
While that figure was down from 47.2 per
cent in the previous financial year, the total amount of housing-related taxes
actually increased by 0.9 per cent in 2011-12.
RP Data researcher Cameron Kusher says it’s
curious governments could rake in more property tax during a period when sales
volumes and house prices were down sharply.
“Our data shows the total value of dwelling
sales across the country fell by 6.1 per cent over the year and, despite this,
property taxes increased. To add to this, the combined capital city home values
fell by 3.6 per cent (in 2011-12) and the annual number of home sales was down
6.1 per cent.”
The two largest sources of revenue were
municipal rates (39.6 per cent) and stamp duties on conveyances (34.8 per
cent).
It’s clear the only possible way state and
local governments could increase property tax revenue was to increase rates.
During 2011-12, municipal rates revenue
rose by 6.1 per cent and land tax revenue rose by 1.6 per cent, while stamp
duty income fell 4.7 per cent.
“While there have been many calls to dump
stamp duty and change it to a broad-based land tax, it appears that neither
side of politics is seriously considering the change, which would most likely
be fairly unpopular with voters.”
Kusher says property tax is obviously the
most important source of revenue for state and local governments across the
country and it is therefore important for governments to find ways to grow
revenue over time or look for other ways to create it.
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Latest interest rate cut breaks records
Latest interest rate cut breaks records
Posted on Tuesday, May 07 2013 at 2:56 PM
Australia’s official cash rate is now the lowest it has been since official records began in 1959, sitting at just 2.75 per cent.
The
Reserve Bank of Australia (RBA) today decided to shave another 25 basis points off
interest rates, after sitting tight for the first few months of the year.
The move
was widely tipped by economists and analysts, after the release of more patchy
financial data in recent weeks.
House
price growth, retail trade figures and new home construction numbers for the
month of March were lower than expected.
This
latest reduction means the cash rate is 175 basis points lower since the RBA
began its current course of cuts in November 2011.
A
statement from RBA Governor Glenn Stevens acknowledges that the cuts are
starting to flow through to the wider economy.
“Over recent meetings, the Board has
noted that interest rates have already been reduced substantially, with
borrowing rates approaching previous lows, and that the effects of this on the
economy are continuing to emerge,” Stevens says.
There could also be scope to lower rates
further in the future and most analysts still tip reductions of between another
25 to 50 basis points.
“The Board has previously noted that the
inflation outlook would afford scope to ease further, should that be necessary
to support demand,” Stevens says.
“At today’s meeting the Board decided to
use some of that scope. It judged that a further decline in the cash rate was
appropriate to encourage sustainable growth in the economy, consistent with
achieving the inflation target.”
How much
of today’s cut the big banks will pass on to mortgage holders remains to be
seen.
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More Aussies buying property
More Aussies buying property
Posted on Thursday, May 02 2013 at 12:29 PM
Buyers are coming back to the property market in droves, encouraged by lower interest rates.
Mortgage broker
company Australian Finance Group says the number of mortgages processed in
April 2013 was 40 per cent higher than in April 2012. The company processed
$3.2 billion in home loans, compared to $2.2 billion a year ago. April’s $3.2
billion figure was also the company’s largest ever volume for one month,
following a record-breaking month in March, where the broker arranged $3.17
billion in home loans.
General manager
of sales and operations Mark Hewitt says the lower interest rates are paying
off.
“With greater
certainty that low rates will be with us for some time, we’re seeing more
confidence in the market than for some time,” he says.
“But recovery,
like property price growth, is very patchy. For example, both in New South
Wales and Queensland, first homebuyers comprise only 3.5 per cent of the market
– about a quarter of the long-term figure.”
Fixed rate loans
are also at an all-time high of 30.7 per cent and non-major lenders managed to
claw back some market share, rising from 20.7 per cent in March to 21.1 per
cent in April.
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Property settlements to go electronic
Property settlements to go electronic
Posted on Friday, May 03 2013 at 3:57 PM
The era of physical title and bank cheque exchanges during property settlements may be over with the introduction of an online property platform.
Property
Exchange Australia (PEXA) is to be the real estate equivalent of the Australian
Stock Exchange (ASX), according to a Marcus
Price, chief executive officer of the system’s developer, National
e-Conveyancing Development Limited (NECDL).
“It’s
a similar process the ASX went through when they went from share script to a
digital register,” Price says.
“It’ll
be available to solicitors, conveyancers and banks as an electronic interface
rather than the present paper-based system and we think it will be
substantially cheaper than current conveyancing.”
Price
says the system will be a world first.
“There
are electronic lodgement systems in places like New Zealand… but we’re the
first ones doing electronic settlement and lodgement concurrently.”
Information
released by NECDL indicates PEXA will allow for transactions like new
mortgages, mortgage discharges, transfers, settlements, caveats and notices to
be carried out online.
Price
says state governments and financiers are on board with the program.
“We
currently have operating contracts with two of the registries in Victoria and
New South Wales, as well as having contracts with three of the major banks.”
NECDL
sees the systems implementation as a seamless process for property settlement.
“In
an effort to provide the conveyancing and legal market with an end-to-end
solution, PEXA will be integrating with information brokers such as InfoTrack
to ensure effective and easy uptake of electronic settlements.”
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Underperforming Brisbane to play catch-up
Underperforming Brisbane to play catch-up
Posted on Monday, April 29 2013 at 12:59 PM
Brisbane’s property market is improving at a slower rate than other centres, according to information presented by Cameron Kusher, a senior research analyst with RP Data.
In a presentation to the
Australian Property Institute last week, Kusher said Brisbane values have room
for improvement.
“Brisbane home values are
increasing but underperforming the capital city benchmark.”
According to the data,
dwelling values have increased by 2.4 per cent over the 12 months to March 2013
across all capital cities.
Brisbane recorded a growth
rate of 1.4 per cent for the same period.
The information shows Sydney
home prices are currently 32.7 per cent higher than Brisbane, the largest gap
since January 2006. Selling prices in Melbourne are 14.5 per cent higher than
Brisbane, the greatest gap since August 2003.
The results come on the back
of Kusher’s report, released on Friday, which says Australian Bureau of
Statistics figures indicate interest rates could fall further.
“Based on data over the past
six months, annual inflation is currently running at 1.2 per cent which is well
below the Reserve Bank’s target range of two per cent to three per cent.”
Kusher says this will
bolster the case for further interest rate falls, not rises.
“Overall the data indicates
that inflation in the Australian economy remains at low levels and the calls
for interest rate hikes will likely now dissipate.
“In fact, with home value
growth slowing in April, commodity prices falling and mining investment
expecting to peak throughout 2013, there may be a need for further interest
rate cuts this year.”
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Underperforming Brisbane to play catch-up
Underperforming Brisbane to play catch-up
Posted on Monday, April 29 2013 at 12:59 PM
Brisbane’s property market is improving at a slower rate than other centres, according to information presented by Cameron Kusher, a senior research analyst with RP Data.
In a presentation to the
Australian Property Institute last week, Kusher said Brisbane values have room
for improvement.
“Brisbane home values are
increasing but underperforming the capital city benchmark.”
According to the data,
dwelling values have increased by 2.4 per cent over the 12 months to March 2013
across all capital cities.
Brisbane recorded a growth
rate of 1.4 per cent for the same period.
The information shows Sydney
home prices are currently 32.7 per cent higher than Brisbane, the largest gap
since January 2006. Selling prices in Melbourne are 14.5 per cent higher than
Brisbane, the greatest gap since August 2003.
The results come on the back
of Kusher’s report, released on Friday, which says Australian Bureau of
Statistics figures indicate interest rates could fall further.
“Based on data over the past
six months, annual inflation is currently running at 1.2 per cent which is well
below the Reserve Bank’s target range of two per cent to three per cent.”
Kusher says this will
bolster the case for further interest rate falls, not rises.
“Overall the data indicates
that inflation in the Australian economy remains at low levels and the calls
for interest rate hikes will likely now dissipate.
“In fact, with home value
growth slowing in April, commodity prices falling and mining investment
expecting to peak throughout 2013, there may be a need for further interest
rate cuts this year.”
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First homebuyer grant changes in Victoria
First homebuyer grant changes in Victoria
Posted on Monday, April 29 2013 at 1:52 PM
Grants for first homebuyers purchasing an existing property will be scrapped in Victoria to fund extra support for those buying a new house or apartment.
From July 1 this year, the First Home Owner
Grant (FHOG) for newly constructed dwellings valued up to $750,000 will
increase from $7000 to $10,000.
It includes properties built under a home
building contract, built by an owner-builder, purchased off the plan or sold
for the first time as a residential premise.
The Victorian Government will also bring
forward stamp duty discounts of 40 per cent for all first homeowners, taking
effect from July 1.
Treasurer Michael O’Brien announced the
changes yesterday and says the move is designed to help young people into their
first homes sooner.
Additionally, the government hopes to
support the housing construction sector.
However, O’Brien admits the increased
grants and fast-tracked stamp duty concessions will come at the expense of
support for buyers of established dwellings.
The current $7000 FHOG for existing
properties will end on June 30, he says. That brings Victoria into line with
Queensland, New South Wales and South Australia.
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