Consumer Credit Code Changes Will Affect Personal Financial Arrangements and Property Developers

The Queensland Parliament is currently proposing two amendments to the operation of the Consumer Credit Code Act (Queensland) 1974. Essentially the amendments will affect personal and housing loan arrangements and the marketing packages of some property developers/marketers. The Code is observed by finance houses including banks and credit unions and also providers of credit arrangements such as retailers Myer and David Jones. The proposed changes are the result of pressure on government to further regulate lending to avoid loan arrangements including the charging of excessive interests rates such as 72 per cent per annum.  The changes will apply to all types of consumer lending for personal purposes ie excludes business loan arrangements.   

The first amendment is to impose a maximum annual percentage credit rate which can be charged for consumer credit.  It is proposed that the Government will cap rates at 48per cent per annum and require that all fees and charges as well as interest charges for a credit contract be included in the calculation of the annual percentage rate. 

The Consumer Credit Code is being expressly extended to apply to vendor finance provided to a purchaser of land.  The usual vendor finance arrangement requires the purchaser to make regular instalment payments.  The section is drafted to catch vendor finance, wherever there is a difference in price paid between the price which would have been paid in the market without vendor finance and the price ultimately payable to the vendor under the instalment contract (whether or not interest is charged).  Any amounts payable other than reimbursement of outgoings and house and contents insurance (including rent amounts) will trigger the operation of the clause.  Similar amendments are proposed for the purchase of goods by instalments where that purchase by instalments is not a contract for the hire of goods.

Whenever a property is sold by instalments or, where other vendor finance arrangements are put in place, the provisions of the code will need to be examined to ensure compliance.  Businesses involved in property development and the marketing of house and land packages or packages involving vendor financing arrangements will need to give these amendments careful consideration. 

For further information contact:
Lynette Reynolds
T (07) 3292 9735 
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