Thousands of homebuyers in Western Australia are choosing ‘off-the-plan’ property purchases that can provide financial, practical, and life-style related advantages. (But before you get too excited, you’ll need to tread carefully).
Let’s start with a quick definition; Buying real estate ‘off the plan’ means committing to buying a property that hasn’t yet been built. (In other words, you’re buying the vision of the developer).
In this article, we’ll take you through the advantages, a few things to be careful of, and the differences from a conveyancing point of view.
Advantages of buying off the plan
- The purchase price can be less compared with an established property. Developers typically offer lower prices and financial incentives early-on to generate cash-flow. This is to secure the project, especially before construction starts.
- Typically, you’ll only have to pay a deposit to the developer, and then pay the remaining balance on completion of the property. This means you’ll have more time to save before settlement while the property is being built
- Often your property increases in value as it’s being built. This provides capital growth.
- There’s also tax depreciation available on new properties. This means you can maximise benefits and improve after-tax cash flow
- The earlier you get involved in buying off the plan, the more you should be able to customise your property. This includes choosing the location, as well as the floor plans and finishes.
Things to consider before buying off the plan
- Sometimes a development doesn’t go ahead. You should get your deposit back if this happens. But then you may have missed out on interest and capital gains through other investments
- Things can be delayed. This can tie up your money. Look for any ‘sunset clause’ in the contract of sale to see how long the developer has to finish the project
- Your ability to service the loan and/or resell can be impacted by a change in your financial position. Or if there are market falls or interest rates rises between the time you agree to buy and actually purchase the property
- You’ll need a conveyancer (or solicitor) to go through the contract with you closely. Look for any unexpected costs or conditions that may affect you down the line. Also look at what will happen should things not go to plan.
- Spend time researching the people involved in the project. This includes the developer, builder, architect and financier. Also, make sure you know what brands are being used for things such as fixtures (e.g. the dishwasher and oven)
How the role of a conveyancer differs when buying off the plan:
Off-the-plan contracts are longer and more complex than the sale and transfer of an established property. The contract may include:
- Building and construction timelines
- Sunset clauses (e.g, the date the construction project must be completed)
- Detailed plans, schedules, and inclusions
- Developer rights (e.g, changes to layout, materials, or finishes)
- Strata plan or community title (not yet registered)
The role of a conveyancer is to review and explain the terms of the contract, identify clauses that may disadvantage the buyer, and to negotiate amendments if required.
Managing Delayed Settlements
Off-the-plan purchases often have delayed settlements. In some cases, it can be delayed 12–36 months after signing.
The role of a conveyancer is to track key dates (e.g., plan registration, completion), advise on buyer rights during this period, and prepare for final settlement once construction is complete and titles are issued.
Plan and Title Registration
As frustrating as it may be, the buyer can’t take ownership until the property is built and the plan of subdivision is registered.
The role of a conveyancer is to monitor when the plan is registered, review the final plan to ensure it corresponds with what was agreed, and to prepare for legal transfer of title once available
Mitigating Legal and Financial Risks
Buying off-the-plan comes with more uncertainties than buying an established property. This can include construction delays, developer insolvency, changes to the finished property, and property market fluctuations
The conveyancer’s role is to advise on the risks before contract signing, ensure the deposit is held in trust (usually 10%), and ensure the buyer’s rights are protected if things go wrong (e.g., termination clauses)
Strata Title Review
Off-the-plan units often form part of a strata scheme. (and they’re all different). The role of the conveyancer is to reviews proposed strata or community management statements, and advise on levies, by-laws, and management structures.
Final Adjustments and Settlement
When the construction is finally finished, settlement is triggered. The role of the conveyancer is to calculate the final adjustments (council rates, strata fees, etc.), arrange settlement once the Certificate of Occupancy is issued, and to coordinate with the buyer’s lender (if applicable)
For more details on ‘off-the-plan’ purchases, please call our office on 9581 2148.
THERE’S A TRUCKLOAD OF REASONS TO CHOOSE C & R SETTLEMENTS IN MANDURAH.
Here at C & R Settlements in Mandurah, we’re renown for our hard work, attention to detail, and going the extra mile for our clients. We’re Mandurah’s Number One independent settlement agent with over 80,000 settlements under our belt (and still going strong).
As an added bonus, when you choose C & R Settlements, you can use our free courtesy truck when it’s time to make the move. All you’ll need is a standard driver’s licence (and perhaps a few strong mates to lend a hand on moving day). Just be aware that our free courtesy truck is very popular, and bookings are essential. Just another reason to make the move to C & R Settlements in Mandurah. For details, call us on 9581 2148. Or email mandurah@crsetts.com.au