The lure of an off-the-plan property can be strong. You get to own a dwelling no one has ever lived in before, complete with brand-new fixtures and fittings. Then there are the generous Victorian government incentives on offer including stamp duty concessions and cash rebates for eligible buyers.
But, you’re buying something that hasn’t been built yet … so it’s not without risk. This could be anything from the developer going bankrupt to construction delays or getting finishes that aren’t quite as promised.
The thing is, these pitfalls aren’t inevitable and can be avoided, provided you know what you’re looking for.
Mistake 1: Skimping on your due diligence
In a perfect world, all developers would be trustworthy. Unfortunately, this is not always the case. And if a developer goes bust before the project is completed, you might join a long list of creditors when you try to get your deposit back. Then there’s the worry of sub-standard workmanship or materials that can lead to serious defects.
That’s why it’s important to make sure you’re buying from a reputable builder and developer. Research some of their previously completed projects to get a clear picture of their track record and reputation.
Mistake 2: Signing the contract of sale without legal advice
Off-the-plan contracts are usually skewed in the developer’s favour – whether that’s giving them the right to alter finishes and fittings or even shrink the size of your apartment.
The only way of knowing what you’re really getting into is to thoroughly review the contract before the deal is inked – ideally with an experienced off-the-plan conveyancer. They can draw your attention to any unusual clauses or help you renegotiate terms to better protect your interests.
Mistake 3: Buying with your heart, not your head
A home is one of the largest investments you’ll make, so you need to get it right – whether you’re intending to live in or rent it out. That’s why it’s so important that logic rather than emotion influences your decision.
Do your research on the development and the neighbourhood. After all, you’re not just buying an off-the-plan apartment: you’re also buying a location. Does it have long-term appeal to you, potential tenants or future buyers? What about transport, schools or crime? If you’re buying for views – are these protected or will another development likely obstruct them in years to come?
Mistake 4: Underestimating all your costs
Last but not least, you need to make sure you’ve factored in all the hidden costs of buying property such as stamp duty, professional fees and home loan application fees. All of these can quickly stack up.
Don’t forget the ongoing expenses of owning the property either, such as rates, strata fees and utilities. Your developer should provide you with the schedule of strata fees before you sign. This schedule may or may not include a sinking fund fee (money used to cover the cost of major capital works or emergency repairs).
Rhiannon Leonard is a Property Lawyer at Off the Plan Conveyancer.
Thinking about buying an off-the-plan property and need an expert conveyancer on your team? Call Off the Plan Conveyancer on 03 9070 9810.