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Buyers in Victoria who purchased off-the-plan apartments scheduled to be completed this year could lose their deposits due to a new policy.
Under a new policy implemented by the big four banks, they will cease lending for one-bedroom apartments smaller than 50 square metres. This will affect buyers who have already secured pre-approval for an off-the-plan apartment which no longer passes the requirements.
The new policy is in line with new design standards. Its implementation means that 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 said this is unfair to buyers, adding that a change in policy post-construction should not 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,” Mr Mendel said.
“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.”
Mr Mendel said the banks should backtrack to the same policy that existed when construction of the building began.
“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,” he said.
“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.”
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