Buying a property off-the-plan has gained great popularity in cities as apartment living and higher density housing is becoming more common as density increases. Buying a brand-new property that nobody has occupied before can be exciting and feel great moving in. It has also historically worked well as an investment strategy.
One thing we do know is that most clients are happy to settle and move in or rent out their new off the plan home. Before you commit to an off the plan purchase, here are some high-level points for you to consider. These have been compiled by our conveyancing lawyers that have helped many clients through their off-the-plan purchase.
It is fun to buy a new home and dream about the possibilities, but off-the-plan has a few unknowns that you should weigh up.
Off-the-plan contracts are usually heavily weighted in favour of the Vendor. For example, there are usually many special conditions that give the developer the right to be released from the Contract if they cannot obtain approval for the development or finance through to changing the plans and fixtures and fittings in the property. Most contracts require acknowledgments from the purchaser that are not required in other standard contracts as well. You may also need consent to on-sell the property before settlement.
Given the complexity of these Contracts it is best to obtain Pre-Contractual Advice.
Off-the-plan property contracts are usually not subject to finance. This means you will need to be pre-approved if you intend to borrow money. If your financial situation changes between signing the contract and the settlement date, this could be problematic as you are in an unconditional contract. Note: pre-approvals only last for a limited time.
Interest rates on home loans might move dramatically between when you sign up and settlement. Be sure to speak to your lender or broker upfront and see what you can afford if they go up.
Typically, the developer can make amendments and changes to the plan including the types of materials they use. There is some recourse if the plans have been amended too much under the Section 9Ac of the Sale of Land Act (s9AC). The s9AC has specific requirements and if you are looking to get out of an off the-plan purchase you might be able to use this to your advantage. There are timeframes that apply so if there are amendments to the plan you should get a conveyancing lawyer to check the plans carefully.
When buying an off-the-plan property as a first home buyer or your principal place of residence you may be eligible for a land transfer duty concession. This is where the dutiable amount is lower than the purchase price in the contract of sale. This is finalised at the end of the project near settlement. The vendor will make a declaration and the land transfer duty will be assessed on that figure. There is no way of locking in the land transfer duty concession upfront and property buyers need to be aware of this.
When researching an off-the-plan property you should definitely take into consideration who the developer is. Also get information about the builder they wish to engage and their experience and quality any previous projects. Evidently you want to know that the builder and/or developer have completed other projects and find out what the quality of these projects are like.
Purchasing a brand new property off-the-Plan can be great, but for some clients they can also be problematic. Especially as the settlement is a long time into the future and circumstances can change. You should carefully consider your options and the market conditions and expected market trend before committing to the purchase.
It is relatively easy to compare similar properties, but there are a lot of unknowns as to completion date, fixtures, fittings and the quality of the end product. All land contracts are hard to get out of once they are unconditional.
Our legal experience and advice will help you to make a fully informed decision about the contract you are signing.
If you have purchased off-the-plan and need some legal advice to get out of your contract, please contact our lawyers. We have successfully helped clients rescind or terminate Contracts and can give you options of how to end an Off-The-Plan Contract.
Occasionally off-the-plan litigation can arise if there is a dispute about defects or contractual obligations. Having a law firm engaged helps to ensure that you can get the right legal advice and respond quickly if need be. This is a main difference between a choosing a lawyer and not a conveyancer. A conveyancer cannot provide this advice and many purchasers need it.
At Conveyancing Depot we help our client to avoid issues and make sure that they understand their rights.
Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of Conveyancing Depot and belong solely to the author of the content. © Conveyancing Depot Pty Ltd.
If you require legal advice specific to your situation please speak to one of our team members today.
Jessica is an experienced conveyancing lawyer and has enjoyed helping many clients buy and sell...