Buying property off the plan means that the property you are purchasing has not been built yet. This option can provide a buyer with some great advantages. However, there can also be some additional risks that should be taken into consideration when buying a property sight unseen.
Initially, the advantages of buying property that has not yet been built include;
- Pricing can be lower and more advantageous for a first-time buyer
- Builders will offer various incentives to entice a buyer to commit
- Various tax benefits including those associated with depreciation
- Value of the property when sold can, and often, will continue to increase during the building process
- Deposit only to the builder will allow for more time to shop for the right mortgage terms for the cost of the balance of the property
- Choices will be available for customizing your property
- Stamp Duty concession that are being offered only to off the plan purchasers
- Builder’s guarantees for the overall home
However, there are areas where the buyer of an off the plan property should be cautious. These include;
- The inability to actually walk through and view the entirety of the home you are buying
- Building delays for which you may or may not be compensated for
- Contractual clauses that allow a builder to make substitutions to materials and products being used in the building and final details of the home
- Additional plan fees including complex maintenance such as swimming pools, hot tubs, playgrounds and landscaping that you may not want to pay for on a monthly basis
- Rules and regulations subsequent to your purchase pertaining to what you can and cannot do to or on your property
- Sunset clauses that alleviate the builder’s responsibility if the property is not completed in accordance with the contractual time frame
- A drop-in market value of the home during the building process
There are also important protections that are in place to protect the buyer during the purchase of an off the plan property. These protections include the right to;
- Review the contract, ask questions and request alterations to the terms
- A cooling off period that allows the buyer to pull out of the contract and receive their deposit back; however, keep in mind that there is usually a small financial penalty for doing so.
- Insolvency protection in the event the builder goes bankrupt prior to completion of the project
- Buyers consent before invoking the sunset clause.
- Notification of any changes in the specs of the project that rise to the level of being material in nature
- Disclosure statements
It is very important that a purchaser of an off the plan property be aware of these areas of pros and cons and protections before moving forward with a contract to purchase an off the plan property. In addition, one of the ways a buyer can be better informed before buying an off the plan property is to do the following prior to entering into a contract;
- Research the builder you will be working with
- Consult those who have worked with the builder in the past
- Review their record of satisfaction with prior purchasers regarding the builder’s reputation for adhering to warranties and repairs
- Research the products and materials that the builder is offering as incentives; such as the appliances, flooring quality, fixtures etc…
- If models are available for viewing, visit the models several times taking measurements of rooms, windows etc…
- Compare property values of the surrounding homes to the new property to ensure you are not overpaying for the neighborhood
- Do not be pressured into purchasing
- Consult a legal professional who deals in the contracts of off property purchases on a regular basis
Remember, off the plan purchasing can be exciting and fun as it allows for you to put your own personal mark on the property you are buying. And, if you take the necessary steps to fully understand the contractual pros and cons, your purchase can go smoothly and your new home can be uniquely yours.
In the event that you find yourself in need of assistance regarding Off the Plan Property purchases, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 780 770.