A Guide To Buying Off The Plan

Pros and cons of buying off-the-plan apartments

It’s quite common for property developers and builders to list apartments for sale before they’re even built. It’s called “buying off the plan”. While there are some drawbacks, it is a very attractive option for owners-occupiers and investors alike. If you are thinking about buying off the plan, it pays to recognise the pros and how to mitigate the cons. We’ll start with the pros.

Lock in a competitive price

When you buy off the plan, you buy at today’s price. In fact, developers often provide discounts and bonuses to get you to sign on the dotted line. If the market is on the rise, by the time you move in, your apartment is worth more than you paid for it. In fact, some savvy investors have been known to make a nice profit by reselling their apartment before settlement.   

More time to save

Developers generally only ask for a 10 per cent deposit to secure the apartment, giving you time to sort your finances and save more toward the loan deposit. While your new apartment is being built, you can put aside money each month. By the time settlement arrives, you will have a bigger deposit to secure your loan. 

All shiny and new

A big plus if you are planning to live in your off-the-plan apartment is you get to enjoy everything shiny and new. New taps and door knobs, fresh paint, clean tiles and grout, and lush carpets. Which means less maintenance and repairs right from the start.  And not only will they be new – they will be to your taste. When you buy off the plan, you get to choose the colours and patterns of everything, including the kitchen sink!

For investors, the “newness” lets you attract a better tenant at a premium price. And at tax time, you can likely claim the cost – or depreciation – of these fixtures and fittings.

Builder’s guarantee

These days, most new apartment developments come with shared amenities, like elevators, a rooftop entertaining area, a pool, or even a gym. While established developments may offer some of these facilities, they are likely to be in need to some work, and less modern than in a new development. If you buy off the plan, you are buying into a lifestyle.

Modern conveniences

These days, most new apartment developments come with shared amenities, like elevators, a rooftop entertaining area, a pool, or even a gym. While established developments may offer some of these facilities, they are likely to be in need to some work, and less modern than in a new development. If you buy off the plan, you are buying into a lifestyle.

And the cons?

Firstly, you have probably heard stories construction delays. There is usually a sunset clause in your contract meant to protect you from these. Put simply, if the construction takes longer than the date in the sunset clause, you get your deposit back and the contract is void. But some questionable builders have been known to deliberately go over the sunset clause in contracts, so they can terminate them and sell at a higher price.

If you buy off the plan, you might also be worried about:

• builders going bust
• reality not matching the marketing.

These cons can be mitigated by choosing an established developer and builder. It definitely pays to do your homework before you sign any contract, or pay any deposit, for an off-the-plan apartment.

Henley Rise has the backing of specialist property developers with a proven track record of success.

The final con is something only you can mitigate – the risk of not being approved for a loan. It is important to make sure you have a decent sized deposit by the time settlement comes around. And you need to know your borrowing power and what your loan repayments will be.

Thinking about buying off the plan?

If you are looking to buy off the plan – either as an investor or an owner-occupier, it’s important to weigh up the pros and cons. While appealing, it is definitely not risk-free. You can, however, minimise risk through researching the developer, the contract and the development itself. And don’t forget to get your finance pre-approved.

Contact us today to find out more.