Our-best-tips-for-buying-off-the-plan

By Natalie Seaman
21st April 2017

To buy a property “off the plan” means that you are purchasing a property that has not yet been built, or that is still under construction.
So why would anyone buy a property that has not yet been built? Well to start with, purchasers who buy “off the plan” can get top value for money, enjoy ongoing tax depreciation benefits and make use of government incentives. There is the excitement of the construction process, walking through your home for the first time at the pre-settlement inspection, and then the joy of moving in to a brand new property and furnishing it like you always dreamed. Let’s look at the pros and cons of buying a property “off the plan”.

What are the benefits of buying “off the plan”?

• Value for money.
Developers often offer properties at cheaper prices when the development is first released to generate fast, early sales.
• Capital growth.
If you do your research and buy in the right location and at the right time, your property will increase in value over the construction period. By settlement time you could already have made a tidy profit. Some investors even sell the property on completion, before settlement, for a tidy profit.
• Low initial outlay.
Typically when purchasing a property “off the plan” you will need to pay a deposit, and the balance of the purchase price is not due until the property settles. This gives you plenty of time, sometimes up to one, two or three years (depending on the construction period) to keep saving and reduce the amount of money you need to borrow.
• Government incentives.
In the ACT, the government offers a First Home Owners Scheme and stamp duty concessions for eligible buyers of brand new properties. Other states and territories offer incentive schemes too.
• Early bird gets the worm.
The properties within the development that have the best floor plans, views and location are always the first to be sold. Doing your research and being ready to purchase when the development is first released for sale will have you a step ahead of other buyers.
• Tax benefits.
Brand new investment properties mean maximum tax depreciation benefits due to the higher starting value of fixtures and fittings and construction costs.
• Add your own personal touches.
Some developers allow buyers who purchase off the plan to choose from a selection of colour schemes available, and it may also be possible to upgrade some selected inclusions. This helps to add a personal touch to your property, and is something you wouldn’t normally get when purchasing a completed property.

What do I need to be aware of before buying “off the plan”?

It can be hard to work out if a property is just right for you when it is nothing more than a floor plan or an artist impression. Here are some important things to consider:
• Location.
Location really does play a huge part in the growth potential of a property. Buy in the wrong area and you could see stagnant or backwards growth. Buying in the right place can see huge rewards. Purchasing a property close to a light rail or train station, shops, restaurants and schools is a major plus, as everyone prefers convenience on their doorstep. You also need to look at what is planned for the future in the area in which you want to buy.
• Be clear about what you are looking for in a property.
If you are diligent with your research it is possible to buy a property in a development that costs the same as other properties but is actually worth a lot more due to its location within the development and its floor plan. This can maximize rental yields and capital growth. Win win!
Here are some questions to consider:
1. What direction would you like your property to face? In Canberra, homes that face north are popular because they get maximum sunlight, especially in winter. More sunlight equals lower power bills.
2. Is there noise from busy roads or schools? If so, is this a “deal breaker” for me?
3. What car parks are included with this property, and where is it/they located?
4. If the property is an apartment, what floor is it on? What will the views be like? Is there a lift in the building? Or will I have to use the stairs?
5. Are there body corporate fees? And if so, how much?
• Is the property within your budget?
Remember interest rates are likely to change over the period that you are repaying your mortgage. Work out what your mortgage payments are likely to be at the current interest rate, then add on a couple of percentage points and see if it still falls within your budget.
• Review the contract carefully.
Contracts can be daunting but it is extremely important that you review every document within the contract, and organise for a solicitor experienced in “off the plan” purchases to review your contract as well. The contract sets out exactly what it is that you are buying.
• If you are not sure about something, ask!
The sales representative is there to help you and they are well prepared for any questions you might have about the property you are buying. It is very important that you are clearly understand exactly what you are purchasing.
• Is there a maintenance clause in the contract to cover any defects?
Make sure your new home is covered for any defects. All POD Projects Group developments give the buyer an opportunity to inspect their new home with the builder before settlement to identify any defects, which can then be rectified before settlement. On top of this, the buyer also has until 90 days after settlement to report any defects (as defined in the contract) which can then be rectified.
• Don’t forget to factor in stamp duty.
Stamp duty must be paid on all purchase contracts within a strict time frame. The ACT stamp duty calculator is a good guide, but be aware that there are certain concessions and exemptions available to eligible purchasers. Ask your solicitor for more detailed information.
• Who is the developer? And who is the builder?
Just as you would research a holiday resort or restaurant before you visit, it is also important to research the developer and builder involved in the property you are looking to purchase. They should have details of their current, future and previous developments on their website, and their contact details should be prominent on their website. Ask to view their finished homes or developments to get a clear picture of what you can expect in your finished property.
• Floor plans
Make sure you take your floor plan home and measure out the dimensions of the rooms so you can get an idea of the space you will have to play with. This will mean more to you than lines on a piece of paper.
Buying a property off the plan can be an exciting and rewarding experience. Why not visit one of the POD Projects Group display suites? We can answer your questions, show you what properties we have available, and tell you about the ground breaking developments we have coming up very soon. Contact Steve Laughton or Marcus Allesch for more details.
Do you like this post? Click here to subscribe and new blog posts will be emailed to you.