As many of Australia’s capital and regional cities undergo increasing densification, buying property ‘off-the-plan’ is proving an increasingly popular way to secure a home or investment property. But what does buying property ‘off-the-plan’ mean?
Put simply, buying off-the-plan involves an agreement to purchase a property (usually an apartment), which hasn’t been built. Buyers can view the design and building plans (including 3D renderings and architects’ sketches) before there is a physical property to inspect.
An advantage of buying off-the-plan is that it can allow homebuyers and investors to purchase the property at a lower price than they could once construction has commenced.
For investors, buying off-the-plan allows a greater amount of depreciation to be claimed on the property, compared to an established residence, as well as the bonus of an extended builder’s warranties for fittings and fixtures.
That said there are some strategies to consider to ensure off-the-plan works for you. For starters, you’re often better-served buying once the development is approved because councils can vary the plans, and you can end up with a property that isn’t quite what you expected.
Also, seek a list of projects the developer or builder has completed to get a sense for their quality. Check the builder’s reputation, credentials and history. Try and obtain access to some of the projects to give you an idea of the standard of finish.
As well as this, it is recommended to use an agent who has experience selling off-the-plan properties so they can guide you through the process. There are many agents across the Raine & Horne network who have broad experience selling properties off-the-plan.
If an off-the-plan contract comes with a ‘sunset clause’, make sure it’s long enough. A sunset clause is a contractual term designed to protect the buyer and the seller.
The basic premise of a sunset clause is to put an expiry date on the property contract. It can be used when a buyer is placing an offer on a property, and to elicit a commitment, from the seller.
Your local Raine & Horne agent will be able to explain sunset clauses in more detail.