Thinking about buying a house or apartment off the plan?

Buying real estate ‘off the plan’ means committing to buying a property that hasn’t yet been built. For both potential home owners and property investors, buying off the plan can be more affordable and flexible than buying an existing property but also comes with other considerations.

Things to consider before buying off the plan

Though you can plan meticulously, the final product will not be known until the property is fully built.

There are some instances where development doesn’t go ahead. You should get your deposit back if this happens, but by tying up your money you may have missed out on interest and capital gains through other investments.

Things can be delayed, which may also tie up your money. Look for any ‘sunset clause’ in the contract of sale to see how long the developer has to finish the project.

Although banks and other lenders may offer conditional approval (finance in principle) for off-the-plan purchases before construction commences, they won’t actually loan you any money until at least the property is built and they have performed a valuation of the finished product and re-evaluated your financial situation.

Your ability to service the loan and/or resell can be impacted by a change in your financial position, market falls or interest rates rises between the time you agree to buy and actually purchase the property.

We will go through the contract with you closely. Look for any unexpected costs or conditions that may affect you down the line. Also look at what will happen should things not go to plan. Some key questions to ask include:

What happens if the project finishes earlier or later than scheduled?

Who takes responsibility for any defects?

Can you resell the property before it’s completed?

Spend time researching the people involved in the project, such as the developer, builder, architect and financier. Are you confident that they’ll perform the job to the quality you expect? Make sure you know what brands are being used for things such as fixtures (e.g. the dishwasher and oven), as well as what alternative brands will be used if the first choice isn’t available.

If you’re an investor the developer may offer a rental guarantee, however these costs are often incorporated into the purchase price and only last for a limited time. Look at comparable properties in the area so you can estimate whether you’ll be able to afford the property when the rent returns to market value.

Other properties may be being built in the same area, so contact the local council to check zoning as well as future developments to ensure they won’t impact your purchase.

We have entensive experiences in the off the plan purchase and development area, so talk to us before you buy, and we will advise you the details in the off the plan sales contract which will help you to make the important investment decision.