The early bird catches the worm!
Buying ‘off the plan’ simply means purchasing a property prior to construction. This applies to strata units or townhouses and, in terms of financial responsibility, you pay a deposit, exchange contracts and pay the balance once construction is complete.
There are pros and cons to buying off the plan.
- In a rising market, buying off the plan can increase the value of your asset.
- Often there are discounts for those that invest early.
- You can add to your savings while waiting for construction to be completed.
- You will be moving into a brand new property.
- The time delay between purchase and completion may be extended, which could be an inconvenience to you. These scenario’s can be pre-empted in the contract
- The market price may fall between the time you sign the contract and when you take position of your investment.
- The development may not proceed due to difficulties with finance or changes in market conditions, and any deposit will have to be returned.
- There can be penalties for withdrawing after you have gone to contract.
As with any property purchase, you must do your homework when buying off the plan. Be sure to:
- Choose a location and property that meets your criteria and lifestyle requirements.
- Check the history of similar developments in the area to make sure the price of the property reflects market value.
- Check that the builder or developer has a history and is reputable. Where possible, ask to inspect their previous projects.
- Arrange to visit the onsite display office and examine the plans so you know exactly how the property will look once complete.
- Ask to see samples of materials and fittings being used in the construction.
- Prepare a checklist for your visit that includes items such as adequacy of power points, phone lines, TV outlets, gas outlets and fridge space.
- Make sure all features and items on display appear in the ‘inclusions’ section of the contract when you are presented with it.
- Have a solicitor experienced in buying off the plan go over the contract and make sure the information fits with what the developer has told you. Also ask your solicitor about all relevant insurance and warranties so you are fully covered.
- Have your finances in order in case the development finishes before the original deadline.
- Get a building inspection done prior to settlement. You should be 100% satisfied that all building work is complete and all specifications and contractual inclusions have been met before paying the final installment of the purchase price.
Those that favour “off the plan” can see our current projects.