More and more people are buying apartments or retirement village homes 'off the plan', meaning they sign a contract to buy an apartment that is yet to be built.
There are many advantages to doing this such as securing a brand new property at current prices that should grow in value over the years it takes to put up the building.
You usually only have to pay 5 to 10% deposit to secure a property off the plan, giving you time to save money while the building goes up. You don't pay the full amount until the building is finished. There may also be tax advantages and stamp duty discounts.
But there are also many pitfalls to buying off the plan and you need to be aware of them before you decide to go ahead.
John Kettle, a property law specialist at Stacks/The Law Firm, advises 12 things to look out for:
- Don't be seduced by glitzy artists impressions or models of the finished building - check details such as building materials, bathroom and kitchen fittings, cupboards, floor finishes, size of elevators, balconies, parking, gardens, communal space - keep all marketing material and take pictures of display homes and models.
- Don't forget laundry and drying facilities. Many do.
- Check the developer has a good record of delivering what is promised in the plan. Inspect other projects they've done.
- Can your apartment's view or sunlight be blocked by a future building? Visit the site and have a good look around.
- Check size of rooms, corridors, ceiling height, storage space.
- If you've ticked off all these, you have to make sure that is what you get. It's vital your contract is watertight. Many contracts protect the vendor such as no guarantee for quality of the finished building. Some buyers found developers made significant changes such as adding levels or cutting open space. Does the plan have council approval? It's wise to have experienced legal advice before signing any 'off the plan' purchases to protect yourself.
- Make sure you'll get your money back if the developer goes bust or doesn't finish the job.
- The Sunset Date - how long does builder have to complete the project and what happens if extra time is needed?
- Get your own independent legal advice, not one suggested by the agent or developer.
- How much are proposed strata levies? Check any long-term deals for management?
- Check bylaws - it might ban pets or access to certain areas.
- Check security, fire safety, broadband, TV cabling, noise insulation, utility costs and environmental controls.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.