New-build rush leaves investors exposed to costly contract traps
Many investors have been lulled into a false sense of security in the wake of the federal tax reforms, as they pivot to new builds while being unaware of potential contract risks.
A conveyancing company has warned that investors have been rushing into new-build properties without fully understanding the complexities of the contracts, following the government’s tax reforms.
According to Lawlab managing director, Ian Perkins, many investors mistakenly believed that off-the-plan and house-and-land agreements were simpler than buying established homes.
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He said there had been a surge in inexperienced investors rushing to enter new-build projects at speed, driven by marketing, turnkey sales packages, and the perception that they were automatically low-risk.
He said many investors mistakenly believed new-builds were simpler because there was no auction pressure, no immediate repairs, and no physical inspection required.
“Investors are walking blind into new-build contracts because the whole sales environment is designed to feel safe,” Perkins said.
“The brochures look glossy, the process feels guided, and buyers assume the contract must be straightforward, but none of that reflects the legal reality.”
He warned that the contracts were usually long, complex, and often heavily weighted in favour of the developer or builder, while risks were often buried in the fine print.
Additionally, he said some investors assumed government building regulations implied broader protection, but there was a substantial difference between consumer and contract safeguards.
“Building standards don’t protect you from sunset clauses, variation rights, valuation gaps, or the developer’s ability to change materials, specifications, or timelines.”
Perkins said many investors had signed without legal review, only to discover later that key safeguards were missing or that the developer had the power to alter the build or extend delivery dates.
“Every developer writes their own contract, so there is no standard version.”
According to Perkins, a combination of tax-driven urgency, polished project marketing, and limited supply was creating conditions where inexperienced investors were left vulnerable.
He warned that if investors did not slow down and obtain advice, they risked exposing themselves to delays, cost blowouts, valuation shortfalls, or contract termination under sunset clauses.”
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“New-builds can be a great investment, but only when buyers understand what they’re agreeing to.”
“Right now, the perception of simplicity is masking real contractual complexity. If we don’t lift contract awareness, we’ll see a wave of avoidable financial stress in the years ahead.”
