Looking to buy a property off the plan? Here’s what to expect.
March 1, 2022
Off the plan properties have become an increasingly popular way to enter the market or move up the property ladder.
It’s important to understand how purchasing off the plan is different from buying an existing property, and for buyers to do their research on the development team that is delivering the project and seeing what their past work is like.
Unlike purchasing an existing property, buyers of off the plan properties will need to use their imagination; you will need to picture your new home using a floor plan and an artist’s impression of the building as your guide. Lucky for you, most off the plan properties will have a display suite you can visit which is very beneficial and you will be able to see all the finishes samples and get a look into what the future could hold for your new property.
Off the plan buying gives you the opportunity to maximise your investment potential, especially in a strong market and to potentially save on stamp duty. For a 10% deposit, you can reserve a property and then enjoy the benefits of rising values before paying the remainder funds and while construction is completed.
Here are 9 unique aspects of buying off the plan and what to expect of the process:
- If you fall in love with an off-the-plan development but are not ready to jump straight in, you can often reserve it with a refundable deposit. That will take the property off the market for 7-14 days (this varies dependant on the development) while you decide what to do.
- Ask the developer to help you select your desired colour scheme and fittings and fixtures at this point. The choices can be limited, colour schemes are typically set, and you will most likely choose from a ‘light’ or ‘dark’ scheme. Options can be varied and will depend on the developer and the stage the project is in.
- Paying a deposit comes next. In most cases, you will need to put down 10% of the property’s value. Note that your bank or lender will not issue a mortgage for you until construction is completed and they can undertake their own independent valuation, so it is important for buyers to have a good understanding on their lending capability without getting pre-approval as pre-approvals only last 3 months.
- The developer will send their contract to your nominated legal representative. You’ll have time to clarify any items and pay the 10% deposit. It is important to ensure your solicitor/conveyancer is experienced with off the plan contracts as they are different to established property contracts.
- It’s great if you’re an early buyer as you’ll likely have the pick of the building/ lot in your price bracket. Those with the best views and in the best position usually go first.
- With your deposit paid and contracts exchanged, the developer will provide regular updates on construction.
- You’ll be invited to a pre-settlement inspection during which you must inspect the work and point out any defects.
Typically, you have three months to identify construction defects. The Defect Liability Period can be longer in some instances depending on the process of the builder of developer.
Buying off the plan is a fantastic way to maximise your investment, it’s now time to start making new memories and enjoy your brand new home!