Purchasing a property off-the-plan is becoming an increasingly popular option for many prospective buyers and investors. While this approach to purchasing property offers many benefits, it is also not without risk, and so it is important to know what to look out for. Here, we answer some of the most common questions people may have about purchasing a property off-the-plan.
What does buying off-the-plan mean?
Buying a property off-the-plan means you are purchasing an apartment or house that is yet to be constructed or is in the process of being constructed. Since there is no existing property to inspect, prospective purchasers will base their decision on building plans, designs and specifications.
What can you negotiate?
Depending how far along the developer is in the construction process, purchasers can provide input into the location and finishes of the property. For new houses, purchasers may have a say on the location and design. For new apartments, purchasers may have options on the floor plan or the colour scheme. Some developers may even offer upgrades to existing finishes, but for an additional cost.
What is the developer allowed to vary in the property?
Off-the-plan contracts give the developer flexibility to make variations to the property. Some of these variations have to do with an outside authority (for example, council or engineering requirements) and some variations have to do with availability of materials (for example, if an appliance is sold out or discontinued, the developer may replace it with an appliance of equivalent quality). Some states require the developer to serve a written notice of changes to the purchaser, including changes which will be or are likely to adversely affect the use and enjoyment of the property.
How long does an off-the-plan property take to build?
Construction time can vary from a few months to a few years depending on the size of the development and construction process. As the timeframe is uncertain, it is important to look at the contract for the sunset date, which is the date that the development must be completed by. Where there are delays outside of the developer's control, the sunset date can be extended.
What incentives apply when buying off-the-plan as a first home owner?
If you are a first home owner, you may be entitled to a stamp duty exemption or concession plus the First Home Owners Grant. When checking if you are eligible, keep in mind the purchase price threshold, as well as the eligibility conditions in your respective state.
For more information on first home assistance, our property and conveyancing lawyers are here to assist. Get in touch on 02 9262 4003 for a confidential discussion or submit an online enquiry.
When does settlement take place?
Many purchasers of off-the-plan properties believe that settlement takes place as soon as construction of the property is finished, which is not the case.
For new houses, settlement is triggered once the Occupation Certificate (a certificate certifying that the property is safe to live in) is provided and in the case of a subdivision of land, the new deposited plan is registered.
For new apartments, settlement occurs once the Occupation Certificate is provided and the strata plan is registered. Please note that each state differs on how much written notice is required, but will generally be 14 or 21 days.
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.
