Raine & Horne Elite Blog

BENEFITS OF BUYING OFF THE PLAN

With an increase of residential developments across the country, more Australians now have the opportunity to purchase their next property off the plan.

Understanding Off the Plan Purchases

Buying off the plan is committing to a property before it has been completely built. It involves a legally binding agreement akin to a traditional purchase contract. While physical visits to the property aren't possible, developers typically provide detailed plans and artistic renders, sometimes accompanied by display suites, to offer buyers a glimpse into the finished product.

6 Advantages of Off the Plan Purchases

Acquiring a Brand-New Property: Off the plan purchases offer the allure of owning a brand-new home, eliminating the need for immediate repairs or renovations common in older properties. Provided it's constructed to high standards, a new build typically demands less ongoing maintenance compared to an older property. This advantage can be instrumental when calculating your budget, as you won't have to allocate funds for extensive maintenance or renovation expenses.
Time to Save: With only a 10% deposit required upfront and the balance due upon completion, buyers have more time to accumulate funds before assuming full ownership.
Potential for Profit: Purchasing at a fixed price shields buyers from market fluctuations. In a thriving real estate market, this frequently results in owning a property that appreciates in value by the time of completion, potentially surpassing your initial investment.
Stamp Duty Benefits: First-home buyers often enjoy exemptions or concessions on stamp duty, while some states offer discounts or deferments for all buyers of new properties. Check your state laws.
Tax Advantages for Investors: Investors can capitalise on tax benefits with newly built properties, leveraging deductions on fixtures and fittings to bolster cash flow. After you've finalised the purchase of your property, consider getting a detailed depreciation schedule from a quantity surveyor. This will make it much simpler for you to claim tax deductions on your home's fittings and fixtures at the end of the tax year.

Navigating Off the Plan Purchases

Here are some situations where property development might not go ahead as planned. If this happens, you should get your deposit back, but keep in mind that your money could have been earning interest or making gains in other investments.

Delays can also occur, which might tie up your money for longer than expected. Check the contract for a 'sunset clause' to see how long the developer has to finish the project.
Even if the bank gives you conditional approval for a loan before construction starts, they won't actually lend you the money until the property is built and they've valued it again.
Changes in your finances, market conditions, or interest rates could affect your ability to get a loan or sell the property between agreeing to buy it and actually completing the purchase.
When you go through the contract, it's important to have a conveyancer or solicitor look at it with you. Make sure you understand what will happen if the project finishes early or late, who's responsible for fixing any problems, and if you can sell the property before it's finished.
Check out the people involved in the project, like the developer, builder, and architect, to make sure they're reliable. Find out what brands are being used for things like appliances and fixtures, and what will happen if those brands aren't available.
If you're investing, the developer might offer a rental guarantee, but this could be included in the purchase price and only last for a limited time. Look at similar properties in the area to see if you'll be able to afford the property once the rental guarantee ends.
Make sure to contact the local council to find out about zoning rules and any future developments that could affect your investment.

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as financial, legal, or investment advice. Any reliance you place on such information is therefore strictly at your own risk