There has been a lot of development in the Newcastle area and there is lots more planned. Buying off the plan can be a great opportunity for both home buyers and property investors alike. However, like everything, there are also some risks.
- Longer Settlement Period
This means you’ll have time to save more money, sort finance or even organise moving house.
- Lower Price
The property developer needs fast, early sales, so very often, the first properties off the plan are the best bargain.
- Locking in a Price
You’re paying for a property at today’s price but paying for it a year, or maybe two years later. If the property market experiences growth, your property will have increased in value by the time you come to move in.
- Tax Benefits
If you’re buying for an investment purpose you may be able to claim for depreciation on items like fixtures and fittings.
- New Home Grant Scheme
The scheme provides a grant of $5,000.00 towards the purchase of new homes, homes off the plan and vacant land on which a new home will be built. The value of the new home must not exceed $650,000.00 and the value of the vacant land must not exceed $450,000.00.
- First Home Owner Grant (New Homes)
The $10,000.00 First Home Owner Grant is available where the eligible transation is for the purchase or construction of a new home with the total value of the property no exceeding the cap amount of $750,000.00.
- Buying Time on Stamp Duty
This is payable on an off plan contract on the earlier completion or 15 months from the date of the contract for sale in NSW. With other contracts, you usually have to pay stamp duty on the earlier completion and 3 months after the contract is signed. Buying off the plan gives you extra time to increase savings or, for the savvy buyer, earn interest on the money set aside for stamp duty.
- Builders Guarantee
Newly built properties come with a 7-year builders guarantee. This means any structural or interior building faults which may occur in this time must be repaired by the builder.
Developers going into liquidation before the project is completed have been widely reported. Ensure you know what the options are if this occurs for getting your money back or what guarantees you have.
- Expectations Not Met
Unfortunately, some builders don’t deliver what they promise and the quality of work may not meet your expected standards.
- Locking in a Price
While we’ve mentioned this as a benefit, it can also be a risk if the property market falls in the time between signing the contract and completion date. While this isn’t so much of a problem if you’re intending to own the property long-term as the market will eventually pick up, it may be an issue if you’re securing finance for the full amount.
Our advice is always do your homework when buying off the plan.
- Visit the property site and consider other constructions in the area that may affect your view.
- Inspect the display home, models and plans and ask about fixtures, fittings and finishes.
- Know the market conditions and research property prices in the area to ensure you’re not paying too much.
- Research the developer – find out how long they have been in business and see if you can find out about their financial status. Also visit properties it’s already built to see the standard of work.
- Make sure you know what you’re buying. Ask what is covered in the purchase price – are fittings, floor covering, painting and decorating also included?
- Study the contract carefully and don’t be afraid to make additions such as guarantees of their financial status and what your expectations are.
It’s always advisable to have a property legal expert view the contract before you sign it.
If you’d like to know more about buying off the plan, or have any other property needs, our team would love to help. Give us a call on 02 4954 8833 or pop into our office.