In an increasingly competitive property market, off the plan purchases can be seen as an attractive and affordable option for first home buyers, growing families and investors looking to expand their portfolios.
Buying off the plan means purchasing a property which does not exist at the time the contract is signed. This can include a house, unit or duplex which is yet to be built, is in the process of being built, or is already built but not registered.
Benefits of purchasing a property off the plan can include locking in the purchase price upon exchange of contracts, giving you extra time to arrange for finance prior to settlement, flexibility in choosing or negotiating desired finishes, fixtures and fittings. Also, given that developers are keen to sell properties as early as possible, you have the advantage of purchasing at a lower purchase price if you get in early.
However, you need to be aware of potential risks involved in an off the plan purchase prior to signing the contract. The following is a list of things that you should do as a prospective purchaser:
· Check the profile of the developer, including work history, to ensure they are reputable and financially sound.
· Review all plans and check if approvals for Council have been obtained.
· Request to see a display unit or house if there is one already built or under construction.
· What facilities and amenities are available (or are being planned) and is location and proximity important to you? This includes schools, shops, hospitals, train station etc.
· Do you know if there are other proposed developments in the area?
· Check to see what flexibility you have in relation to choosing fittings, fixtures, materials, layout and colour scheme.
· Are there restrictions on the maximum size of the dwelling that can be built on the land?
· Consider what options are available to you for payment of deposit on exchange of contract.
· Given that it can usually take anywhere between six months to two or three years, from the contract date to settle on off the plan purchases, plan ahead (consult with accountant or financial advisor if needed) to ensure that you would be in a position to be able to secure finance on settlement.
Our legal team can assist you in navigating through the complexities associated with an off the plan purchase to ensure you make a decision that is right for you.