Buying off the Plan

Posted by Spot On on

 BUYING OFF THE PLAN

As with all property purchases there are risks associated with buying off the plan. As experienced conveyancing experts in Brisbane we have learnt that developers tend to focus on the positive aspect of their transaction and omit the negative aspects to potential purchasers.

THE POSITIVE ASPECTS OF BUYING OFF THE PLAN

  • Buy buying off the plan you as a purchase can make significant savings by paying the market value as it stands at the time of signing contracts. Due to the perceived assumption that real estate values increase with time this can lead to significant savings before the dwelling has been completed.
  • You can secure your future home for a much lower initial capital outlay than if buying a completed dwelling, often only 10% deposit is needed. Off the plan purchases are typically set with a progress payment system.
  • Increased property value during the time of construction. If the real estate market experiences rapid growth, you as the potential new home owner you can experience huge growth also.
  • Tax Savings – If you buy the property before construction has begun you can make significant savings on land tax values. Additionally if you are buying for investment you may be able to claim against your dwelling before it is completed.
  • Customise your new home to your liking. You have the option of selecting colour palettes and finishes to suit your taste and lifestyle. You may even have the option of altering the configuration and layout of rooms. Your new home will also be new.
  • Lifestyle – You will be able to get the lifestyle you are looking for in the location you are seeking for a reasonable price.

NEGATIVE ASPECTS OF BUYING OFF THE PLAN

  • You are buying a property with the largest financial invest of your life without having ever seen it. You have no idea of knowing exactly what the final property will look like. The developers indicated fixtures and fittings may be different on completion. The property may not meet your expectations.
  • Long delays in the completion of projects. The developer may experience complications which cause significant delays of years. Leaving the owners with a property that may be of lower capital value upon completion that what is anticipated at purchase. Additionally, the developer can go bankrupt before the building is completed.
  • Finance difficulties due to time delays. Banks that have committed to a pre-approval on the basis of market value may rescind or reduce the loan amounts. This leaves you in a position of sourcing finance at short notice.
  • There may be defects in the completed dwelling. Although there are clauses and conditions in the contract to protect your rights. The disputing of these defects can be laborious, costly and stressful.
  • Deposit and ongoing progress payment system. If not clearly identified in the contact the vendor or developer may come back to you as the purchaser with unwarranted requests.

Before buying off the plan we suggest that you take time to investigate how the system works, the costs involved. Most of all know your rights, and the rights of the developer. Finally be aware of the risks associated with buying a nonexistent property.