Buying off the plan explained

As many of Australia’s capital and regional cities undergo increasing densification, buying property ‘off-the-plan’ has grown in popularity as a way to secure a home or investment property. But what does buying property ‘off-the-plan’ really mean?

Put simply, buying off-the-plan involves an agreement to purchase a property (usually an apartment) that is yet to be built. Buyers can view the design and building plans (including 3D renderings and architects’ sketches) prior to there being a physical property to inspect. A big benefit to buying off-the-plan is that it can also allow homebuyers and investors to purchase property at a lower price than they could once construction has commenced.

According to Luke Smith, Licensee-In-Charge of Sydney-based Raine & Horne Projects, which specialises in project marketing and off-the-plan property sales, there are other benefits to buying property in this way. “Off-the-plan purchasers are able to secure a brand new property in a market that is high on demand yet has limited supply,” says Luke. “In addition, they can save funds throughout the period of construction while still reaping the benefits of any capital growth.”

This is because home loan repayments don’t start until construction of the dwelling is complete. “This means if you bought off-the-plan 12 months before completion, you’ll have a year’s head start on your loan before you start making repayments.”

Generally speaking, off-the-plan properties appeal to a variety of buyers, including investors, owner occupiers, syndicates and self-managed super funds, Luke says.

“The opportunity to secure property off-the-plan is being taken up by first home buyers, downsizers and both local and overseas investors. We’ve seen a lot of purchasers who have done well purchasing off-the-plan – they’ve made significant gains before they’ve even settled, coming back and buying their second or third apartment off-the-plan.”

For property investors, purchasing off-the-plan also allows a greater amount of depreciation to be claimed on the property, compared to an established residence, as well as the added bonus of the seven-year builder’s warranty on fittings and fixtures.

“Buying off-the-plan means you own a new property with new fixtures and fittings, which are less likely to need replacement. These properties will also likely have a well-planned modern design and the latest finishes.”

What’s more, off-the-plan properties are eligible for stamp duty savings and grants. “In NSW for example, first home buyers can apply for a $15,000 grant when buying a newly-built property for less than $650,000. They are also exempt from stamp duty if the value of the new home is less than $550,000, or a concession on stamp duty if the value is between $550,000 and $650,000,” adds Luke.

But while there are plenty of positives with an off-the-plan property, as with any real estate purchase, you need to do your homework and ensure it is right for you, advises Luke. “I recommend studying the contract closely and seeking independent legal advice. Also, it’s worth taking the time to conduct your own market research into a suburb’s population growth, infrastructure investment and job prospects so you have an idea of your capital growth potential.

“Affordable off-the-plan investments around central services such as train lines are the highest in demand. If you are looking at purchasing off the plan, I recommend areas that are close to transport, universities and employment hubs.”

Luke notes that projects in Sydney’s Inner West have performed well over the last few years. “Many purchasers buying off-the-plan in suburbs such as Marrickville, St Peters, Petersham, Summer Hill and Dulwich Hill have seen excellent gains. They all offer good access to transport, shops and lifestyle facilities, and all came from a relatively affordable price point. Looking ahead, my tips for areas to watch over the next year or two are Canterbury, Arncliffe and Mascot.”

To find out more about an off-the-plan property purchase, contact Raine & Horne Projects on 02 8052 0000, or visit

Article originally appeared the Raine&Horne Fusion website. To view the original article, click here: