Common Questions When Buying Off-The-Plan

By Olivier Miller


There are many benefits to buying off-the-plan, but with limited land and new developments in our region, your choices are restricted and we suggest you should seek expert advice from an experienced ‘off-the-plan’ specialist sales consultant.


There are some great benefits to buying off the plan including:

  • Price – You can pay the current market value with potential for the property to increase in value during the course of construction.  History dictates that the original ‘off-the-plan’ purchaser reaps a strong capital growth.
  • Choice – If you are early, you could have more flexibility in the finishes, and first choice of the position of your property within the development.
  • Time – A longer settlement means you have time to get your finances in order or save for settlement.


However there are some risks every buyer should be aware of too:

  • Expectations – Clear communication with the developer is essential to avoid any misunderstandings of the final product.  A small size variation is acceptable under many contracts.  Minor variances may also occur with the final fixtures and fittings.  Open communication regarding the minimum standards will help avoid this issue. 
  • Interest Rates – Interest rates may rise before you settle on the property.


1.  Will my property be identical to the artist impressions?

The artist impressions will be a good measure of layout, style and general finishes, however you should check with the sales consultant to find out exactly what finishes will be used and how your property may differ.  A schedule of these inclusions may be available upon request and are included in your contract.


2.  How much will my off-the-plan deposit be?

Most of our current off-the-plan properties require a 10% deposit, with the balance due upon completion of the building, although you should check the individual contract with the agent as this may differ.  Your deposit will be held in a Trust Account until settlement or the registration/sunset period expires.


3.  What is a registration/sunset clause?

A sunset clause refers to the maximum amount of time the developer has to complete construction of the project. It also gives the buyer a date when they can legally walk away from the contract if the building isn’t finished, at which time the deposit should be refunded in full.  Alternatively, the buyer and the developer may enter into a new contract if both are still happy to proceed with the original price and terms.


4.  What happens if the market drops or interest rates rise?  Do I still have to settle?


Yes, you are obligated under the contract to settle.  Smart property investors take a long-term view of investing to ride out the cycles without letting their emotions distract them from the end goal. Capital appreciation doesn’t occur in a uniform manner year after year.  Fixing your interest rate is one way to minimise exposure to interest rate rises. However, locking in a fixed loan rate may mean you may have to pay break costs if you want to pay out the loan early.  A variable mortgage means you’re exposed to rate rises.  Another option is to take an even way bet and fix part of your loan.  Speak to your bank or financial adviser to find a loan that best suits your situation.



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