On 1 July 2015, the ACT Asbestos Taskforce (acting on behalf of the ACT Government), published the addresses of all 1021 affected properties, together with an update on the status of the buy-back scheme. It tells us:
- 989 buyback applications have been returned by homeowners to commence valuations
- 955 letters of offer sent to homeowners by the Taskforce
- 846 homeowners have accepted Taskforce offer
- 586 affected houses are now owned by ACT Government
The government is firmly of the view that because of the numbers that have agreed to enter into the buy-back scheme, and those who have now surrendered their properties, the scheme is a success. The drafters of the scheme and those who support it suggest that the scheme is a fair scheme and it is the best option available for all Canberrans. Given the recently announced NSW program, affected homeowners may have a different view.
There is no doubt that the scheme has provided financial opportunities for a number of families: it has allowed them to purchase another property and in many cases, to restructure their living arrangements (i.e. retire and downsize). There are certainly affected homeowners who are happy with the outcome of the scheme.
However, anecdotal evidence has shown us at Snedden Hall & Gallop that those people are in the minority. It is clear from many of our clients that the buy‑back scheme has not been a positive experience for all; it has not provided many clients with financial security and has caused significant stress and anxiety to themselves and their families.
An unintended consequence of the scheme is the flooding of home-buyers into the ACT property market. It is becoming increasingly obvious that the ACT cannot cope with the influx. Obviously, our views are not founded on research, but our clients are saying that the available stock of homes near the average house price is limited when compared to the number of families entering into that market. It is not uncommon to see the same families at multiple open homes week in, week out. Further, it is not uncommon to see multiple Mr Fluffy households at auctions bidding against each other.
Our clients also inform us that they are paying more for a home now than they would have paid before the Mr Fluffy saga, notwithstanding the government’s comments that Mr Fluffy would not cause an increase in the values of properties. Clearly, this is not what our clients are experiencing.
Of a bigger concern to our clients is the uncertainty of the government’s option to allow them to buy back their property. The government has, for many understandable (and some not-so-obvious) reasons, failed to properly indicate to homeowners when they will be able to purchase their block back; the value of that block; or even how that value is to be calculated.
There are rumours as to the method of calculation but there is nothing concrete as to how that will occur. Of concern to us, although not a legal issue, is that some homeowners believe that the market value is the unapproved rates valuation. It is clear that the unapproved value for most properties is not the market value and the market value is considerably higher. What this ultimately means is that the homeowner will be required to pay the market value at purchase and depending on when the property is eventually demolished, the re-purchase price may end up being almost the same as the amount the government actually paid at the time of surrendering the Mr Fluffy home.
When you add to the purchase price of the land, the building of a new home; the whole exercise may become cost prohibitive.
Cleary the Mr Fluffy saga has presented an unprecedented challenge to government and homeowners alike and there is unlikely to be one model that satisfies all. However, the intricacies of the ACT government’s chosen scheme are in need of careful examination to ensure you understand your rights and obligations and the likely future risks. Financial advice, as well as legal, is essential.
At Snedden Hall & Gallop, we do more than simply explain the surrender deed to you: we attempt to set out the entire buy-back scheme, including reflecting on the government’s publications and providing a snapshot of the landscape as we see it now and how the buy-back process may evolve. Contact our Conveyancing team today.