Buying off the plan? Have your eye on some land? We’ll help you navigate the journey.
The concept is straightforward: put up a deposit to help the developer fund construction and pay the balance when the build is complete.
But sometimes people come unstuck if they’ve bought the land and haven’t got approvals for the build yet. It can be tricky to navigate, so here are some tips below. If you’d rather skip the reading and have an easy, no obligation chat, we’re here to help.
Common questions for home builders
One of the biggest advantages of buying off the plan is time. Unlike traditional property purchases with relatively short windows to round up the total finance, you will have at least 12 months, if not longer, to settle. Savvy buyers will take advantage of this extra time to save their pennies and reduce their borrowings.
If you dream of a new home but have nightmares at the thought of building one, an off-the-plan purchase may be the perfect compromise. Although you will not get to design everything as you would with a custom-built home, most off-the-plan developments allow some customisation of finishes and fixtures. Make sure your contract outlines what you can tailor and that you are clear on any additional costs.
Various incentives are still being dangled in front of first-home-buyers, which may add to the appeal of buying off the plan.
Concessions vary across Australia and some have been curbed since January 1, so visit your State or Territory web site for the latest information on grants and exemptions. You can also research your eligibility for stamp duty concessions on new properties at www.stampdutycalculator.com.au
Off-the-plan apartments are often pitched heavily at investors due to the tax* benefits that come with depreciation on new properties and rental guarantees. Tax savings will depend on your individual circumstances, but generally the newer the property, the higher the depreciation allowance for the building and fixtures.
Investors may also be offered attractive rental guarantees for a limited period. Make sure you do your homework on rental returns on similar properties in the area before accepting the developer’s terms. Be wary of over-inflated rental guarantees. Builders will sometimes promise a high-rent yield to lure investors, build the cost into the property price and then subsidise any gap themselves for a short period. When the rental guarantee expires, you may find the actual market rent falls well short of what you originally pocketed. If investing, make sure you have the option to manage the property yourself or with your chosen property manager from the time you take possession.
Many buyers get swept up on a wave of rising property prices when they hand over their deposit in exchange for a floor plan. Historically, property is a consistent long-term performer, but property prices can plateau and even wane at the mercy of economic factors.
Buyers also need to be wary of over-supply, which may devalue their property. Queensland’s Gold and Sunshine Coasts are carrying a glut of apartments on the back of many years of off-the-plan sales, while the skylines of capitals such as Canberra have real estate commentators urging caution.
Make sure you consider the bigger picture if buying off the plan. Research how many other developments are planned in the area and whether any increase in apartment numbers is justified by new or improved infrastructure, such as transport corridors, business precincts, universities or hospitals.
Make sure you purchase from a reputable builder and take the time to research their previous projects. Do they use quality contractors? Do they deliver projects on time? Make a point of visiting some of their projects so you can assess the finished product first-hand.
Investments like this are big decisions, so investing in the right professionals to have onside before you commit is money well spent. Ensure you get professional legal advice on any contract before you sign it and that you speak with your financial advisor or tax professional to make sure you’ve got the right advice from day one.
Make sure your deposit will be refunded if the project doesn’t go ahead by a certain date.
Make sure the contract contains as much detail as possible about the finished product.
Be clear on what finishes and fixtures you can customise.
Find out if you can on-sell during construction in case your circumstances change.
Ask if you can inspect the site during construction.
We will call you as soon as we can to chat about what you are looking for and how we can help you get there. Nothing formal just a good old fashioned conversation.