Buying a property off-plan: what it is and what you need to know
If you’re in the market for a new home, you’ve probably heard the term “off-plan” before. But what does it mean, and is it something you should consider when looking for your dream property?
Here, we dive into the pros and cons of off-plan properties and give you some simple tips to help you avoid the common pitfalls of buying a property that’s yet to be built.
What is "off-plan"?
In simple terms, buying off the plan means purchasing a property that hasn’t yet been built or is being built. You’re essentially buying a blueprint or plan of a property that will be constructed at a later date. While it may seem daunting to invest in something that doesn’t yet exist, there are actually many advantages to buying off-plan.
What are the advantages of buying off-plan?
Savings
First and foremost, buying off the plan can offer significant savings. Developers will often offer discounts or incentives to buyers who purchase early in the development process and by the time a building is completed, the market may well have moved forward, and the value of the home increased.
By getting in early, you are very likely to secure a lower price than you would if you waited until the property was complete and on the market.
Customisation
Additionally, buying off-plan may allow you to customise your home to your specific needs and preferences. You can often choose from a range of finishes, fixtures, colour schemes and fittings to create a space that truly reflects your style and tastes. This level of personalisation is not usually possible with a pre-existing property, where you may have to settle for features and finishes that don’t quite match your vision.
Builder guarantee
Different states have different legislation, but generally speaking, a builder will offer certain guarantees and protections on a new build that are not possible for pre-existing buildings.
In NSW, vendors selling off-plan are obliged to provide buyers with a disclosure statement outlining important information such as latest possible settlement dates and other conditional events as well as draft documents regarding by-laws, proposed finishes and so on.
Furthermore, any new build should be fully up-to-date with the most recent legislation and building codes for the region, which can provide a buyer with great peace of mind.
Things to look out for when considering an off-plan property
The developer
One of the most important things to consider when buying off-plan is the developer’s track record. You’ll want to ensure that they have a good reputation and a history of delivering high-quality properties on time and within budget. You can do this by researching the developer online, reading reviews from previous buyers, and checking their credentials with industry organizations, including your trusted real estate agent.
Location
It’s also important to think about the location of the development. While an off-plan property may seem like a great deal, it may not be worth investing in if it’s located in an undesirable or poorly connected area. Make sure you research the neighbourhood and surrounding amenities, such as schools, public transport links, and local amenities, to ensure that the property will be a good long-term investment.
Time to completion
Another factor to take into consideration is the timeframe for completion. While buying off-plan can offer significant savings, it’s important to understand that there may be delays in the construction process. This could mean that you may not be able to move in when you originally planned, which could impact your finances and living arrangements. Make sure you have a clear understanding of the expected completion date and build in some buffer time to allow for potential delays.
How about financing?
When it comes to financing an off-plan property, you may need to approach things differently than you would with a pre-existing property.
First, you’ll need to pay a deposit – usually between 5% and 20% of the purchase price – at the time of signing the contract.
Once you’ve managed the deposit, the balance of the purchase price won’t have to be paid until settlement, when construction is completed, so you potentially have extra time to save while you are waiting for the property to be finished, which may lower the amount you need to borrow.
Take the time to speak to your financial advisor, who will help you understand your options and ensure that you can secure the financing you need.
Summing things up
Overall, buying off-plan can be a great way to get into the market, save money and create a custom home that truly reflects your personality and preferences. However, it’s important to do your research and take some precautions to ensure that the property you’re investing in is a good long-term investment.
By working with a reputable developer and trusted real estate agent, researching the location and surrounding amenities, and securing appropriate financing, you can feel confident in your decision to buy off-plan.
Other buying, selling and investing articles and resources
Guide to property investment success in NSW
Selling a house or apartment in NSW eBook
Buying a house or apartment in NSW eBook
