Buying Off The Plan: What You Should Know Before Diving in
Looking to buy an apartment or house off the plan? Here is everything you need to know before getting started.
For owner-occupiers and investors purchasing a property off the plan can be an excellent option, especially for first-time buyers. But it’s not without its risks. Keep these things in mind to help you make the right choice.
What are the Advantages?
Buying off the plan involves purchasing an apartment that is yet to be built, or in the process of being built. When buying off the plan, the purchase price is agreed on before the building is complete. This means you’re locking in a price at the current market value and there’s the potential for the property to increase over the course of construction.
Typically, you will only have the pay the deposit upfront and the remaining balance upon completion of the property. This means you will have more time to save while the property is being built. You also generally only need a small deposit – roughly between five and 20 per cent – and are essentially receiving a home in brand-new condition, meaning greater energy efficiency, new finishes and better appliances.
Stamp Duty Discounts
By buying off the plan, you may be entitled to stamp duty discounts, as most states offer exemptions or concessions on newly constructed properties. If you are purchasing the property before construction begins, the stamp duty will only apply to the land value and not the finished property. In some states, you may also be able to defer the stamp duty payment for up to twelve months. If this is your first home, you may be eligible for the First Home Owner Grant (FHOG) – rules and grant amounts vary depending on which state or territory you are in.
Choosing the Right Development
Now that you’ve decided to buy off the plan, it’s time to consider the various developments on the market. Set your budget and stick to it – keeping in mind additional costs such as stamp duty, fees and possible interest rate rises. Consider factors such as location, neighbourhood amenities and transport links, along with the actual onsite facilities included in the development such as parking, internal lifts, gardens and pool. These extra amenities often mean more expensive strata levies, be sure to ask about these in advance to avoid financial stress down the track.
Visit the Display Suite
While considering various developments it is important to visit the project display suite. Here you will be able to see the quality of the interiors, including fixtures and finishes, and the appliances that are included. Make sure the brands featured are ones that you recognise and not some cheap knock offs. And avoid any headache by asking upfront what exact items are included in the sale. The floorplan is the most important thing to consider and whether or not there is ample space. Also keep in mind orientation, remembering that north or north-east facing properties are considered the most desirable. In terms of the communal features, ask whether that gorgeously glistening rooftop pool will look exactly as it does in the marketing render.
Things to Consider
Before purchasing off the plan, make sure to engage a conveyancer or solicitor to assess the contract closely. They will be able to ascertain any unexpected costs or conditions and make sure you are covered should things not go to plan. Do some research on all the players involved in the project, including the developer, builder and financer. Do they have a proven track record? Will they be able to deliver on the project? You can also contact the local council to check zoning and ascertain if there are any future developments slated for the area that could affect your property down the line.
The “Sunset” Clause
A sunset clause is routinely included in off-the-plan property contracts. This clause outlines the date by which the developer must complete the project. If not completed by that date, the buyer has the legal right to walk away from the contract and receive their deposit back in full. Generally, projects will be completed well within the date outlined, as they have already allowed for unexpected delays.
I'd love to live near