10 Quick Tips for Buying Property Off the Plan
Buying property “off the plan” means committing to buying property in a new development before construction is completed. In many if not most cases, often before construction has even begun. It is a popular move, especially amongst foreign and interstate investors, when the property market is hot and prices are rapidly rising. Securing an “off the plan” purchase can be a savvy choice to lock in a favourable price, claim depreciation and save on possible stamp duty exemptions. Despite the potential benefits, buying property off the plan can also be risky and has its pitfalls. Here are ten tips to help you make an informed decision: SEEK INDEPENDENT LEGAL ADVICE Select a legal representative of your own choice and ensure they are experienced in off the plan purchasers. RESEARCH THE DEVELOPER’S REPUTATION With access to online information in an instant, reviews from past clients may be available to the public, good and bad. Be sure to request and visit past developments completed by the builder and speak to past purchasers. EVALUATE THE MARKET Make sure that you evaluate the market for resale, rental or rent-to-buy opportunities in the location. Research the prices of comparable properties in the same area, and evaluate price separately from any incentives the developer may offer. BUY EARLY IN THE PROCESS To get the greatest return, buy early in the process. The price will appreciate as the project nears completion and savings in stamp duty may decrease. KEEP ALL MARKETING MATERIALS Check basic details such as building materials, bathroom and kitchen fittings, cupboards, floor finishes, size of elevators, balconies, parking, gardens and communal space. Check all the fine print to ensure you are notified of any possible variations allowed within the contract during construction. DON’T ASSUME, CHECK THE MUNDANE DETAILS Having access to all utilities may be an automatic assumption. Check to ensure that all necessities such as phone and broadband are available and part of the project specifications. Laundry facilities, open space and fire safety are also often not thought about so be sure to have a checklist and thorough review of what is and isn’t included. IS THERE A ‘GET OUT CLAUSE’ Ensure you understand what the developer may modify, and negotiate to preserve your right to cancel the contract if there are significant changes including adding levels, reducing open space or additional construction that might block a valuable view. WHEN IS THE DEADLINE FOR COMPLETION Otherwise known as the “sunset date.” What are the financial consequences if the project is not completed on time? Will you have the right to cancel, and at what point(s) and with what financial ramifications? WHAT HAPPENS IN THE EVENT THE DEVELOPER ABANDONS THE PROJECT? Set in place an enforceable way to get your money back if the developer abandons the project or becomes bankrupt. In most cases, everyone moves forward in an agreement with the best of intentions. It’s when things get out of an individual’s control that may leave you carrying the baby. COUNCIL APPROVAL Make sure that the plan has council approval, and check the bylaws for things like pet or access restrictions. These may also include road access and off street parking restrictions. Any major development will always have conditions which may impact and affect what is allowed and what isn’t. Again, never assume. Whenever buying a property “off the plan” buyers should protect themselves with due diligence and vigorous contract negotiation. Ensure that you have sound independent professional representation. Good advice from an experienced advisor is almost always worth the cost in a speculative transaction such as an “off the plan” purchase, even if it is only for the peace of mind in the knowledge you are making the right decision.