Buying property off-plan. What you need to know
In today’s red-hot property market, buying an apartment or townhouse off-plan can seem very attractive. After all, you get a brand new property at a set price. What could go wrong? The short answer is plenty.
Buying off-plan could be the perfect solution. And it can just as easily be a nightmare. Here’s what you need to know about buying property off-plan.
Advantages and disadvantages of buying off-plan
Buying off-plan means that you are signing up for a brand new home. Your property will satisfy all the latest building specifications, and so ongoing maintenance will be minimal.
Furthermore, an extended settlement period gives you lots more time to get your finances sorted. And you can save up for furniture and fixtures.
However, the biggest advantage is you are buying at a set price and with just a low initial outlay. And if the market continues to boom, your property may even increase in value by the time you move in.
The main disadvantage is that you are dependent on the developer to deliver. Your home and deposit could be at risk if the developer’s business runs into financial trouble or the build takes longer than anticipated.
Plus, if there’s a downturn in the property market, then your home could be worth less than you paid. It’s also possible that the finished product doesn’t live up to your expectations.
How to protect yourself when buying off-plan
There are plenty of potential pitfalls to avoid along the way. Here are three steps you can take to protect yourself.
- Do your homework
Make sure you google the property developer and construction firm. Find out about their track record and whether there have been any issues with past developments, insolvency, or bankruptcy.
- Carefully examine the floorplans and specifications
Be sure to visit any show homes and inspect the quality of finish, room sizes, and layout. Check and double-check all the details. Sometimes developers reserve the right to alter the project plans without needing your consent. Find out what the situation is with your home.
- Be prepared
Have a lawyer check over the contract. Be clear about what happens if the developer goes into liquidation, the company is sold, or extra time is needed to complete the build. Being prepared also involves having a plan B if interest rates go up or lending criteria change during the settlement period.
Thinking of buying off-plan? It’s a big decision so talk to us first for some expert advice.
Please note some banks will not do an approval off plans, so finance may need to be conditionally approved and then reapproved prior to settlement once construction complete.