Whether you are a first home buyer or property investor, buying a property off the plan is a great option for many Australians and foreign investors. There are several benefits to purchasing a property off the plan that buyers should be aware of. Getting advice and being informed before you buy is important when buying any property especially a house or apartment off the plan.
One of the well-known benefits of buying off the plan is that buyers can secure a property at today’s price and there is potential for capital growth before you settle. This can be especially true for buyers when property prices are rising rapidly. It is not a guarantee though as there is a potential downside risk of the property not going up in value or even decreasing in value.
The property size and postcodes matter too, some lenders won’t lend on certain postcodes and smaller apartments. If you are getting a mortgage to buy the property you need to know what your lenders criteria are.
It is important to do your due diligence when buying a property. Newly built homes are always desirable and often get a better resale price. It’s important for investors and homeowners to do your research on property values and recent and historical sales to make the best investment decision.
Another benefit of buying off the plan is that it allows buyers to take advantage of government incentives and grants that are available for new constructions. In Australia, there are several grants and incentives available for buyers of new properties, such as the First Home Owner Grant and the Home Builder grant. These incentives are designed to make it more affordable for first-time buyers to buy a property, but conditions apply. Your broker or conveyancer can help you find out if you are eligible or not. The State Revenue Office in each state has their own grants and you can find out more here.
When buying off the plan, the contract with the developer will be different from other typical contracts. The special conditions are extensive and need to be read carefully. The terms in most off-the-plan contracts favour the developer heavily. It is important for a lawyer or conveyancer to give you contract advice and you to be fully informed of your rights. There are a lot of additional protections that have become law over the years to protect buyers when buying off the plan. These include changes to sunset clauses and how much a developer can change the plan during the build.
With anything new you also have the benefit of warranties or guarantees. There are great protections for buyers, but as you can’t see the finished product there is no guarantee of the finished product you are buying. The Australian building codes are strict and there are consumer protections. To protect yourself you should find out about the builder before committing.
Purchasing off the plan property gives the buyer an opportunity to customise the property to their liking. Some property developers offer buyers the option to choose the colour scheme, flooring, fixtures, and fittings. You can create a home that is tailored to your taste and lifestyle. Think about your pets too and don’t forget the doggy door! Any additional items or special requests should be noted in special conditions. A conveyancing lawyer can draft special conditions for any special inclusions or amendments.
Lastly, it is important to consider how long a development may take to complete. Especially if it is a new release as it may take a while for a developer to get required presales. Developers need to usually pre-sell most of the development before a lender will finance a project. This is an important question to ask the real estate agent.
As with any building project things can be delayed and this needs to be taken into account. Off-the-plan contracts have sunset dates and this means that if the project isn’t completed you can terminate the contract. It is important to know what these dates are before signing.
Buying off the plan can be a great option for many home buyers in Australia. From a legal perspective, it allows buyers to secure a property at today’s price, take advantage of government incentives and grants, and as a buyer you might have the opportunity to customise the property to your liking. But there are downside risks too.
It is always recommended to consult a professional conveyancer or property lawyer before making any property purchase to ensure that you fully understand your legal rights and obligations. We help property buyers and sellers with selling and buying property off-the-plan.
Speak to one of team at Conveyancing Depot, today about how we can help you.
If you are a foreign investor, then you will have to apply to FIRB to be able to buy a property in Australia.
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.
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