Buyers of a long-awaited residential project in Campbell will be asked to pay more for their home in order for their off-the-plan contract to continue.
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Canberra developer Doma has written to buyers of The Foothills project informing them they can "discuss the option" of cancelling the contract if they do not wish to pay the extra funds.
"Poor construction advice" from the now-collapsed PBS Building was among the reasons for the project delays and cost escalations, the letter stated.
Work on The Foothills on Limestone Avenue halted in late 2022 after the developer failed to secure financing.
In a letter to buyers this month, Doma managing director Jure Domazet said buyers could expect to hear from real estate agency Colliers in the next six to eight weeks about the next steps.
It was "highly likely" buyers would be asked to pay additional funds in order for their purchase to continue, the letter, dated October 17, said.
Buyers would be expected to agree to new contract terms, including a new sunset date - the date by which a developer, or seller, must fulfil their contractual obligations - of December 2029.
Construction work was not expected to recommence until at least mid-2024.
Issues 'exacerbated' by PBS Building's 'poor' advice
Doma purchased the 4.1-hectare former CSIRO headquarters site for $20 million in 2016, The Canberra Times previously reported.
The National Capital Authority approved the Foothills development at the base of Mount Ainslie in late 2019 and the developer submitted its works approval application in mid-2020.
Nearly all of the planned 117 apartments and 135 townhouses had been sold by the time construction began in early 2022.
Between approval and construction commencement, there were a number of delays, which Mr Domazet detailed in his letter to buyers.
In June 2020 the Commonwealth government requested an addendum to a previous study into the site's Aboriginal heritage values, following criticism from experts and an Indigenous elder. The development was allowed to proceed with no changes, Mr Domazet said.
In December 2020, the ACT Heritage Council accepted a heritage nomination for the site but later confirmed it had no jurisdiction over the site, Mr Domazet said.
The discovery of in-ground asbestos pipes also delayed ground works, he said.
Delays were "exacerbated" following the voluntary administration, and subsequent liquidation, of PBS Building's ACT business.
In his letter, Mr Domazet told buyers PBS Building had been engaged in an "early contractor involvement design role" at The Foothills to manage the design of the first two stages of townhouses.
PBS Building's role in the development ended in late 2022. Doma told The Canberra Times in March it had "no other projects with PBS" besides its Melrose project in Woden at the time of the builder's administration.
He said PBS had given "poor construction advice" in this role which had "exacerbated the construction cost escalation that beset the project along with the industry in general across Canberra and beyond".
Townhouse, apartment designs to be amended
Buyers were told the request for additional funds would be assessed on an individual basis, with older sales requiring a greater percentage of costs.
Townhouse owners would also be expected to pay more, "as they have had the most dramatic cost increase", Mr Domazet wrote.
A series of design changes would also be proposed, with the most comprehensive changes to be made to the townhouses.
Mr Domazet said the aim was to "deliver a dwelling that is at least equal to what was originally purchased".
The group is currently in discussions with several builders "to ensure that the fairest market pricing is achieved", a spokesperson said.
Following design changes, construction would not recommence until at least mid-2024, with settlement likely in 2026, Mr Domazet said.
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Those dates were considered "the best case" and contracts would need to be varied to allow for this, Mr Domazet said.
"The contractual delivery dates are expected to be required by the financier to reflect a units plan registration date of 31 December 2027," he wrote in the letter.
He said the financier would require a further period of two years for a sunset date under the contract "so a realistic sunset date for contracts will be 31 December 2029".
A spokesperson for Doma told The Canberra Times finance was yet to be secured and would be sought "once an acceptable construction cost plan has been achieved".
Developers require buyers' consent to cancel
In 2021, new laws were introduced to impose conditions on the use of sunset clauses and development delay clauses in off-the-plan contracts in the ACT.
Sellers, or developers, are only able to use these clauses to rescind, or cancel, a contract if the buyer consents.
If the buyer does not consent, the seller can seek an ACT Supreme Court order to cancel the contract.
The changes followed a series of contract cancellations in Canberra, where developers had rescinded off-the-plan purchases only to resell the properties at a higher price.
A spokesperson for Doma would not confirm whether the group would seek a Supreme Court order in the event the developer could not reach an agreement with a buyer.
"At this point in time Doma's focus is on trying to work with current purchasers to enable us to deliver the project," they said.
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