Things to Look For When Buying Off the Plan

When you are purchasing a house or apartment, one of the most important decisions you have to make is whether you should acquire an established home/off the plan. It can be quite exciting to be the first person to live in a particular home; plus you have the flexibility to choose the floor plan you like as well as the colour schemes and finishes.

The Benefits

But there are certain things you should look for when purchasing a home before it is built. These could be related to price, tax advantages, total value of the property and a number of other aspects. First let’s take at the benefits of buying off the plan:

• You pay the most current market-price for your property, even though it will get completed only in the future
• You only have to make a deposit at the outset (generally 10%) and the rest of the payment has to be made only when the property has been completely built. This means, you will not have to opt for bridging finance and can organise your finances in a better way
• There is always the chance of the property value increasing when you finally settle a couple of years later
• For those who are buying the property for investment purposes, there is a possibility you may also be able to claim for depreciation on tax for the fittings and fixtures and this is something you should be checking with your accountant
• Certain states offer stamp duty reductions when you buy off the plan
• Properties that are newly-built in Australia come with a 7-year builder’s guarantee. This means, in case there are any interior or structural faults, it is the builder’s responsibility to rectify them

Things to Look Out For

Credibility

When you are buying off the plan, you have to rely on the builder’s reputation and as well as the developer’s financial security, goodwill and honesty. Research the developer properly before signing on the contract. Find out what the company’s reputation is in the market and the number of years they have been operating in the industry. The other things you should be checking are the number of other projects they have been involved in and you should also be asking to inspect some of those properties. It will give you an idea about the quality of their construction work and how the finished product looks

Complaints

Check with the licensing authority to see if there have been any complaints lodged against the developer. If the latter goes bankrupt before construction of the property has been completed, it will mean a definite financial loss for you in terms of the deposit, legal costs as well as conveyancing

Inspection

Most builders have some display homes and you should make it a point to check these. Focus on the quality of the fittings, fixtures and finishes

Financial Aspects

As mentioned earlier, you stand to gain if the property value increases since the time you paid the deposit & the point of settlement. However, aspects such as an interest rate rise; oversupply and market fluctuations can have a negative impact on the property. Check what the property values in that neighbourhood are as well as the duration of time the development has been on the market

Before Signing On the Dotted Line…

• Visit that property site, check its location and see if there are other constructions around the area that might affect your view
• Inspect the display home very carefully and check the plans and models in a detailed manner
• Investigate all the finishes, fixtures and closings
• Research the developer- check previous work, speak with previous clients to identify whether they were satisfied with the property
• Ask questions to understand what is covered in the quoted purchase price – e.g.: floor coverings, fittings, decorating, painting etc, and what you will have to additionally pay for

Check the Contract

Very importantly, ensure that all your expectations (ones that have been discussed with the developer) are written in the contract. This will help avoid any disagreement with your developer once the project reaches completion. It’s important to have a crystal clear idea about who you are dealing with, what you are getting and what you can expect, while you are purchasing a home before it is built.

Thanks for reading,
Elementree Drafting Services
1300 566 873