As Australia’s population continues to grow, expanding our major cities, residential off the plan projects are on the up and up. In fact, Realestate.com.au reports that there are thousands of Australians taking the leap and buying off the plan property each year.
But for some buyers, purchasing a property without seeing a final product may be a foreign concept. So how does it all work? Here’s our guide to what, how and why you should consider buying off the plan.
What is buying off the plan?
Buying off the plan means that you as the buyer are committing to a property before it reaches the final stages of development. This is a legally binding agreement between the buyer and seller of the property, just as if you are signing a contract of purchase in a normal buying process.
As buyers cannot physically visit an off the plan property, the seller will often supply plans and artistic renders of how the property may look, with additional information about the property and the developer.
The advantages to buying off the plan
According to Belle Property and Hockingstuart Head of Growth, Nick Boyd, there are plenty of benefits to buyers looking at off the plan properties.
“Buying off the plan is a great option with significant financial gains for the buyer – with the end result being, a brand-new home, sometimes without premium market prices,” says Nick.
More money in your pocket
When purchasing off the plan, often buyers are only expected to pay 10 per cent of the buying price as a deposit, and the rest on completion of the property. This means that buyers have more time to prepare and save before moving into the property. Plus, sometimes the property can grow in value during the time it takes for the project to be completed.
“If you are an investor planning on leasing out the property, there is also more tax depreciation available on new properties, which means you are able to maximise benefits and improve after-tax cash flow,” says Nick.
Stamp duty discounts
Most states and territories offer greater discounts on newly constructed properties, and if you sign the contract of purchase before construction begins, the stamp duty will only apply to the value of the land, not the finished property.
“Plus, if you are a first-home buyer, you can get exemptions and concessions on stamp duty for buying off the plan,” Nick adds.
A brand-new property
As the property is brand new, you there will be no need for repairs, or renovations, so unlike most homebuyers saving additional budget for the unknowns, this is one less thing to worry about.
“With changes to the Australian Building Code, all new properties must meet stringent energy efficiency requirements and therefore your off the plan property will be fitted with the most power-saving systems and fittings – meaning smaller bills and long-term cost-savings too,” explains Nick.