Buying Off The Plan - What does it mean?
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 or unit) 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 Craig Fisher, of Raine & Horne Toowoon Bay | Killarney Vale 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 Craig. “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, Craig says.
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.
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 Craig. “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.
To find out more about an off-the-plan property purchase, contact Craig Fisher 0438 429 040.
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