Buying off-the-plan can be a very tempting prospect. You get a brand new property to call home without the maintenance and repair worries that older properties bring.
But while there are advantages to buying off-the-plan, there are drawbacks you should consider too.
To help, we’ve outlined some of the pros and cons below.
Pros of buying off-the-plan
- More time to save
As with most property purchases, you pay an initial deposit to secure an off-the-plan property (usually 10%) with the balance payable on settlement. However, off-the-plan properties only settle when construction is completed – typically one to two years down the line. This gives you extra time to save for a larger deposit and get your finances in order.
- Government grants and concessions
Buying property can be expensive once you’ve factored in all the associated costs and fees. However, the Victorian government offers incentives for buying off-the-plan property such as stamp duty concessions and cash rebates for eligible buyers. Currently, these include:
- A 50% stamp duty waiver for newly-built homes valued up to $1 million until 30 June 2021.
- A one-off First Home Owners Grant of up to $20,000 to help get your foot on the property ladder.
- Developer incentives and discounts
Developers typically need to sell a certain number of properties before they can begin construction. And the easiest way to encourage sales? By offering discounts on the purchase price and incentives, including furniture packages and gym memberships early on in the sales process.
Cons of buying off-the-plan
- The developer goes bankrupt
Sometimes, developers run into financial difficulties and end up going bust before the project is completed. Depending on the terms of your contract, this can result in you losing your deposit. The best way to minimise this risk is by doing your due diligence before you sign on the dotted line. Go through the contract’s fine print with an experienced conveyancer to make sure you’ll get your money back should the worst happen.
- Construction delays
Unfortunately, it’s not uncommon for construction projects to fall behind schedule. Delays aren’t just frustrating, they can cost you money – whether that’s stumping up for temporary accommodation when you can’t move in as planned or lost rental income if you’re buying it for investment purposes. Your off-the-plan contract should come with a ‘sunset clause’ that protects you from excessive delays. A sunset clause is a time limit on the contract’s validity. So, if a developer fails to complete by a specified date, you can walk away from the deal and get your deposit back in full.
- Not getting what you were promised
Buying off-the-plan means you don’t get to see the property until completion. And while glossy sales brochures and display units may promise you one thing, the reality might not live up to your expectations – particularly when it comes to finishes, fixtures and fittings. That’s because many developers include clauses in their contracts that let them make changes during construction.
Don’t want your dream home to turn into a financial nightmare? Off-the-plan sales contracts are usually tailored to favour the developer rather than the buyer. Protect yourself by getting the right advice from an experienced conveyancer. Contact Sutton Laurence King Lawyers on 03 9070 9810 or email@example.com for help.