Buying properties off-the-plan can get a lot of air time in the media, and we all know investors who sing its praises, and others who say it's a nightmare — but what's actually involved?
Buying off-the-plan is simply purchasing a property that is yet to be built. Buyers will purchase site-unseen, and agree on an apartment based on an architectural plan.
Off-the-plan properties can be in the form of apartment blocks or town houses. Often the developer will have a demonstration property or showroom for prospective buyers to inspect, but it is likely that each property plan will vary from the next one, at least to some degree.
The process of an off-the-plan property purchase can differ between developments. Some developers reserve the right to alter the design of a property without having to seek approval from the buyer. Others may expect buyers to contribute additional funds if construction costs fluctuate. For these reasons, an off-the-plan property contract is very different to a standard contract of sale.
Upon signing the contract of sale, the deposit amount is due. A deposit for an off-the-plan property is typically, and cannot exceed, 10 per cent of the purchase price. The deposit is held in a trust account until settlement. The remainder of the purchase price is due upon completion of the development.
How long does the process take?
After the contracts are signed, there is a cooling-off period, which varies in duration from state to state but is generally between two and five business days. Within this time frame, home buyers have the option to pull out of the sale while only forfeiting a small portion of their deposit.
Construction time varies dramatically across different developments, but the project can generally take a couple of years to complete. The developer will have this information available to you, and should keep you updated along the way.
Once construction has completed, your loan is finalised and you will proceed to settlement of your new apartment.