Buying “off the plans” remains a popular option for purchasers wanting a brand-new, low-maintenance home built to modern standards — often with a fixed purchase price that avoids short-term market volatility.
But while buying off the plans can be appealing, it carries unique risks that aren’t always obvious at the time of signing. With developments sometimes taking years to complete, purchasers can find themselves locked into an agreement that no longer suits their financial position or the market.
Whether you’re thinking about signing an off-the-plans agreement now or entered one years ago and are wondering if you can get out — here’s what to watch out for.
Deposits – When Can They Be Released?
In most off-the-plans developments, the deposit is held by the developer’s solicitor as stakeholder. It’s essential to understand when and on what terms the deposit can be released.
Ideally, the developer shouldn’t be able to access your deposit until settlement — particularly if KiwiSaver funds are being used. If an agreement is validly cancelled, those KiwiSaver funds will need to be repaid to the KiwiSaver provider, which can be administratively complex.
You may be entitled to a deposit refund where:
- The agreement is subject to conditions (such as finance or feasibility) that are not satisfied.
- The agreement is validly cancelled under a contractual sunset clause or under section 225 of the Resource Management Act 1991 (RMA).
Tip: Where possible, pay your deposit only once the agreement is unconditional from your perspective as the buyer.
Sunset Clauses – Buyer Protection or Developer Escape Hatch?
A sunset clause sets a date by which a specified event (commonly issue of title or settlement) must occur. If that deadline passes, one or both parties can cancel the agreement.
Sunset clauses can protect purchasers from endless delays — but depending on how they’re drafted, they can also favour the developer.
A buyer-only sunset clause is preferable. It allows the purchaser to walk away if:
- The development is delayed or stalled; or
- The developer isn’t meeting its obligations.
Without this safeguard, a developer could cancel the agreement under its own sunset right, then resell the property at a higher market price — a practice that has drawn attention from both the courts and consumer regulators.
In 2025, Parliament voted down the Property Law (Sunset Clauses) Amendment Bill, which proposed to restrict developers from cancelling under a sunset clause without the buyer’s consent. The Government rejected the Bill, arguing that the proposed changes could deter new housing developments in a sensitive market (LawNews, 2025).
That decision means buyers cannot rely on legislative protections — it remains essential that your contract clearly defines who can trigger the sunset clause and on what terms.
Statutory Rights Under the Resource Management Act
In addition to any contractual sunset clause, section 225 RMA provides a statutory right of cancellation that cannot be contracted out of.
It includes two key protections:
- Cooling-off period: A buyer may cancel the agreement within 14 days of signing.
- Statutory sunset: A buyer may cancel if, after two years from the date the resource consent was granted or one year from the date of the agreement (whichever is later), the developer has not made reasonable progress toward obtaining or depositing the survey plan.
What counts as “reasonable progress” depends on the facts. As noted in North Shore Developments Limited v McKay, an objective assessment is required, and each situation will need to be assessed against its facts. To date, the Courts have indicated that a “robust, broad-brush approach” is to be taken when assessing whether reasonable progress has been made and it is clear that the Courts will not allow a developer to simply sit on its hands.
Regulatory Outlook – Resource Management Act Reforms: New Zealand’s resource management system is currently undergoing significant reform, with the RMA set to be replaced by new legislation by 2027. During this transition, planning and consenting rules may change, which can affect development timeframes. This makes it even more important for buyers to rely on strong contractual protections rather than expecting regulatory certainty.
When Circumstances Change
Off-the-plans purchases often span years. Over that time, buyers’ circumstances – or the market – can change dramatically.
We’re increasingly seeing situations where:
- Buyers’ lending capacity has reduced, or pre-approvals have lapsed.
- Market values have softened, leaving the agreed price above current value.
If you cannot validly cancel, walking away exposes you to serious risks:
- Forfeiture of deposit – typically up to 10 percent of the purchase price.
- Damages claims – a developer may sue for loss on resale or enforcement of specific performance.
Practical Tips for Buyers
- Get advice early. Always have a lawyer review the agreement before you sign – these documents are lengthy, developer-drafted, and heavily favour the developer.
- Check the deposit arrangements. Confirm who holds it and when it can be released.
- Scrutinise the sunset clause. Who can trigger it, and when? Is the timeframe realistic?
- Be wary of extension requests. Developers often ask to extend sunset dates; understand your rights before agreeing.
- Do your due diligence. Research the developer’s track record – ask for completed projects and references.
- Keep finance current. Maintain communication with your lender and lawyer if your circumstances change.
Key Takeaway
Buying off the plans can deliver your dream home — but it can also tie you to a commitment that no longer fits. Understanding your contractual and statutory rights at the outset is the best protection.
Thinking about buying — or looking for a way out?
Our property and private-client teams regularly act for buyers in off-the-plans developments across New Zealand. We can review your agreement, assess your exit options, and ensure your interests are protected before you sign.
Contact our team today to discuss your situation and get practical, expert advice before taking your next step.
Special thanks to Partner Alysha Hinton and Senior Solicitor Katarina Radosevic for preparing this article.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.