Buying Off the Plan Property

When buying off the plan, you will see designs and plans that are provided by the developers before the house has been built. There will often be a range of floor layouts that you may choose from, and you can get your own design input on things like tiles, paint colour, appliances and flooring. 

Once you’ve committed to the purchase, the construction period can begin. If you are buying apartments off the plan, then you may need to wait until all, or a percentage of, apartments are sold before the building begins. Often this is done because the developers need to sell the apartments or houses as a way to finance the build.

Learn more: how long does property settlement take?

When looking to buy any property, there are a series of needs and questions that need to be addressed and many processes and steps that need to be followed.

Buying a house off the plan can be a great way to get your dream home without blowing the budget – but that doesn’t mean it is the right choice for everyone. To help you decide, we’ve compiled a list of pros and cons for you to consider before deciding on buying off the plan – and if you’re still confused, our team of conveyancers are more than happy to help. 

What are the advantages of buying off the plan?

Discounts and government grants

With the incentive to buy off the plan from the state government, you could benefit from things like the Off-the-Plan Concession or the first home owners grant. With these grants and concessions, you can significantly reduce the costs of moving into your new home.  

Input on the design 

Because the house is yet to be built there’s an opportunity to get your personal touch on the home’s design. With fixtures, flooring, facades and colour palettes often being customisable, you can make the house feel like your home much more easily than if you had bought an established home.

First pick of the apartments 

Being an early buyer in the off the plan property can be quite advantageous as you get the opportunity to choose from a greater number of options. Consider the view and layouts available and how things like the direction of the sun might impact the outlook and ambience of your new home.

Work out your future plan: it usually takes about 12 to 18 months before you can finally move into your off-plan property and maybe even longer if there are any construction delays. It is definitely not a small wait, so you’ll need to make sure you are up for it and that you have back up living arrangements.

Lock in the purchase price

Once you’ve signed the contract for your new home, you’ve locked in the contract price of the property. That means as the property value increases when the construction starts, you’ve secured a low-cost investment before the price booms.

What are the risks of buying off the plan?

Risk of non-completion 

If, after you’ve made your purchase, the development does not go ahead, you should be entitled to the return of your deposit. However, this means you’ve missed out on interest that your deposit could have accumulated if it had stayed in your bank account. 

There is also a risk that a development might not go ahead because the developer is in financial difficulty and potentially administration. If this happens, you may not be able to receive the refund of your deposit amount. Instances like these are why it pays to involve your conveyancer as early as possible, as this may be mitigated through the addition of appropriate conditions in your contract.

Restricted on design influence 

Although you have more influence than if you were buying an established home, you are still heavily restricted by the plans of the developers. That means if you’re looking for your forever home with the details that are specific to you, this might not be the best option. 

Construction delays 

It’s important to be mindful that when buying off the plan there may be a risk of significant construction delays. If you’re looking to move into the home then this may mean additional costs for accommodation, or if it is an investment property, that means there will be a delay on when your property will start to pay itself off. There may be something called the ‘sunset clause’ – this means if the property isn’t complete by a certain date, the buyer may be able to void the contract. Our team of expert property lawyers can assist you with these complex clauses. 

1. Sort your finance out before committing

Just like all property purchases, new and existing, make sure you check on your borrowing capacity with your shortlisted lenders before signing a contract. There can be many hidden costs of buying a house, so having a clear idea of where your finances sit is imperative. One of the major issues with signing contracts off-the-plan is that some builders sell apartments up to three to four years before the likely completion date. Check with your lender on this and their comfort with you entering into a contract if you don’t have a clear view of when settlement will take place.

2. Review government incentives and grants

There are a number of homebuyer grants and stimulus packages offered by the government in different parts of Australia to assist eligible owner-occupiers to build a new home, substantially renovate an existing home, or buy an off-the-plan/new home. For example, in South Australia there is the HomeBuilder grant, where you could be eligible for up to $15,000 towards your new home – these incentives can significantly take the pressure off your finances when purchasing.    

3. Consider market trends 

Rule 1 of buying any new property is to undertake thorough due diligence. When you are new to the property market, do as much research as you can. Check a few statistics like similar dwellings and median pricing for that kind of dwelling, price growth, vacancy rates (especially if you plan to rent your place), rent, employment and other economic statistics and demographics of the surrounding area.

4. Research your developer, architect and builder 

As your new place is yet to be built, you’ll need to satisfy yourself that your developer and builder are reputable. Check them out online, read customer reviews and have a look at their completion record. Their recent new property development history will be insightful during this process.

5. Seek advice

As you’re buying off the plan you’ll have a million questions like: is there a building guarantee or should I get a building and pest inspection? We know that buying a house is not something you do every day and having a good grip on what’s happening at each step in the process can be hard. Once you’ve decided on your purchase, get in touch for independent advice so your conveyancer can talk you through the next steps in the process. It helps to even reach out to those who have gone through the process before you and see if they have any stories and tips that could be insightful.