Buying Off The Plan - The Benefits And Considerations | McGrath
Buying Off The Plan - The Benefits And Considerations

Buying Off The Plan - The Benefits And Considerations

16/12/2020 | 3 MIN READ

Owner occupiers and investors are often attracted to buying properties off the plan. Here is a look at what it means to buy a property this way, some potential benefits and areas you need to be aware of.


When you buy a property off the plan it means you are buying a property that hasn’t been built yet. You can review the developer’s construction plans, design and layout, and in many cases can inspect a model or display property so you can get a feel for the end product. However, there is no physical property for you to inspect prior to putting down a deposit. 

If you’re looking at buying a property off the plan, here is a look at some of the key benefits:

  • Buying early at the first release stage allows the purchaser to consider the best selection of dwellings types - offered at the ‘first release price’. Often developers looking to commence a sales and marketing campaign will require strong pre-sales in order to obtain development funding. Beyond this initial release often prices are likely to increase.
  • In most cases you only need to pay a 10% deposit to the developer, with the remaining balance due when the project is completed. Projects can take a few years to complete which in turn gives the buyer more time to save before settlement is due.
  • Depending on where you buy the property, you may find the value of the property increases between the time it was bought off the plan and the time construction was completed, therefore giving you immediate capital growth.
  • If you get in early, you generally have more flexibility to not only choose your property and its location in the complex, but you can also customise elements of your property’s design such as floor plans and finishes.
  • In some states and territories, particularly now as we are coming out of COVID-19, First Home Buyers are being offered incentives and stamp duty reductions to encourage first home buyers to buy brand new properties.
  • In many cases, councils have energy efficiency requirements as part of the planning approval process. So, buying a brand-new property will most likely be more energy efficient and in a better condition meaning you may not have to pay as much for ongoing repairs and utility bills.
  • Depending on your state or territory, you should also be protected by builder’s warranty insurance while your property is being built, which means certain structural or interior building faults that emerge within a certain timeframe must be repaired by the builder. This has been refined in NSW following some serious issues with a few recent developments. Make sure you investigate your local Department of Fair Trading or similar department in your State or Territory.

If you are a property investor buying properties off the plan offers some other benefits. They: 

  • Offer significant depreciation benefits which can be used to offset tax
  • Often have strong tenant appeal as people like living in new homes. What this means is the investor has a greater chance of finding and attracting high-quality tenants who will in turn be more likely to look after the property and pay their rent on time
  • Come with brand new appliances and often extended warranties on major systems such as electrical, plumbing, heating and air conditioning. What this means is if something breaks or goes wrong, the factory warranty should cover it
  • Have low or no maintenance costs which means fewer annual expenses for investors

Some things to consider when buying off the plan

Buying off the plan can be good option, however not all developers and developments are equal. Ensuring you do your due diligence into the developer, builder, architect and financier to determine if they are able to perform the job to the quality you expect is critical. Plus engaging the services of a conveyancer or lawyer is also vital as they will review the contract with a fine-tooth comb, so you know what the terms and conditions are before you sign on the dotted line.

Whilst this is not a finite list of things to look for, your conveyancer will help advise you in more detail, but here is a look at some of the checks your conveyancer or lawyer should make when reviewing the contract:

  • Look for any unexpected costs or conditions that may impact you down the line
  • Look at what will happen if things don’t go as planned, such as who takes responsibility for defects and whether you can re-sell the property before it is completed.
  • If the development fails to go ahead, they need to ensure the contract states you will get your deposit back.
  • Sometimes developments can be delayed, and the completed project may get pushed back. It is worth looking at any ‘sunset clauses’ in the contract to see how long the developer has to complete the project. A sunset clause is a statement in the contract of sale that puts a time limit on the contract’s validity. If the developer fails to complete the project by this date, the contract is declared null and void and the deposit is returned to the buyer.
  • It is also worth looking at the brands of appliances, fixtures and fittings the developer is planning on using to ensure you know what they are. Keep in mind developers sometimes can’t use their first choice of fixtures and fittings due to supply and other issues, knowing what the alternative brands are is a good idea.

Whilst a home loan lender may offer conditional approval for the loan on the off the plan purchase, they won’t actually issue the loan until the property has been built, they have inspected it and reviewed your financial situation at the time of settlement. Ensuring your financial situation is similar or stronger is important.

You may also find that when you are due to settle on the property that the interest rate you budgeted on when you signed the contract has increased. Talk to your home loan lender about this scenario early on as its important you understand what a change could me to you and your finances. 

A final word

Buying off the plan can be more affordable and flexible than buying an existing property, but it does come with some important considerations. To talk to our team further about buying a property off the plan and to see what developments we have available at the moment click here.


Other buying a house or apartment tools and information

Our house and apartment inspection checklists 

Process of buying a house or apartment

Buying a property by auction

Negotiating a private treaty or private sale property purchase 


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