While many buyers tend to look to pre-built properties, there’s a raft of benefits of buying an apartment off the plan instead. There are the potential savings, the modern designs to choose from and customise – and the fact that you’ll be moving into a stunning new building certainly adds to the appeal. Before signing a contract for off the plan apartments, it’s worth familiarising yourself with some essential aspects of the process.
What is meant when they say off the plan?
If you’re buying an off the plan apartment in Sydney this means that you’re not buying an existing property – rather, you’re making an agreement to purchase a property once it has been built. You’ll only need to make an initial 10% prior to construction and remaining payments will occur from the settlement date when the property is completely built.
How is buying off the plan different to buying any other apartment?
One of the most notable differences when buying off the plan apartments is that you won’t be able to step inside the property until after your new apartment is completed. It is likely, however, that you’ll be able to visit a similar display apartment to get a feel for the spaces and details that you can expect. You’ll also be looking over detailed floor plans and imagery that help you envisage the finished product. Of course, the other major difference is that you may need to factor in a number of months for your stylish new apartment to be completed before you can move in, depending on the individual property. There are many advantages to buying off the plan, as well as a few potential risks.
Advantages of buying off the plan
- The ability to customise your home
You’ll likely fall in love with an apartment’s floor plan right away, but if you have any different ideas for spaces or finishes you’ll be able to request them before construction begins.
- Stamp duty concessions
Building an apartment off the plan generally means you could potentially save thousands of dollars off your stamp duty obligations, compared to buying an existing property.
- Prime locations
Buying off the plan can help you to secure a spot in upcoming and high-value areas close to the Sydney CBD, such as Waterloo, Eastlakes, Green Square and Parramatta to the west.
- A brand new building
By moving into a new architect-designed property you won’t need to deal with any old wiring or plumbing, and you certainly won’t need to factor a renovation budget in!
- Extra time to save
Because you need only make a 10% deposit right up until the building is completed, you will have a longer timeframe to save and therefore minimise any loan amounts.
- The potential for capital growth
In many cases, by signing a contract before the property is built you could lock in a better property price than you would otherwise pay for the completed property.
Possible risks to consider
- Unknown finishes
Because you can’t walk through the property physically prior to purchase, it’s important to research your developer so you can trust they’ll be completing the property to the highest of standards. Be sure to check that they’ve successfully completed similar projects in the past.
- The price factor
Although unlikely, there is always a possibility that a property could be valued at a lower value once completed, which is why it’s imperative to do your research – for example, on the local area and its demographics, price trends, marketability and the developer’s reputation.
Understand your inclusions
One of the keys to successfully buying a property off the plan is to ensure you know exactly what you’ll be getting, as you won’t be able to inspect your new apartment before you sign the contract. Luxury apartments will feature stunning features and carefully considered spaces, but take note of the details of the floor plan and paperwork – are elements such as air conditioning, energy efficient lighting, window coverings and floor coverings included?
Get to know the sunset clause
The sunset clause is unique to off the plan contracts, and it refers to the maximum time that the developer has to complete the building process. This may well take into account the possibility of potential delays from factors like weather or supply availability. If the apartment is not built by the sunset date, then you’ll be free to walk away from the purchase contact and receive your deposit back if you choose to do so. Although high quality developments will be finished with plenty of time to spare, it’s wise to be familiar with this aspect of any off the plan agreement.
Check for home building compensation cover
Builders within New South Wales are required to have home building compensation cover (previously known as home warranty insurance). This provides cover in the unlikely case that the builder disappears dies, is deregistered or becomes insolvent. A reputable builder will also hold contract works insurance, public liability insurance and workers compensation insurance (SafeWork in NSW), plus have a defects and liability policy to cover the possibility of any problems following completion.
Research the developer
If there’s one thing worth remembering when buying off the plan apartments in Sydney, it’s to thoroughly research the developer you intend to trust to build your new property. You will want to be sure you’re entering into a contract with a reliable group that has a proven track record of developing similar properties. By carrying out due diligence and preparing yourself with an understanding of the purchasing process, buying off the plan can be an incredibly rewarding and exciting experience.