With more developments popping up around the Newcastle area, ‘buying off the plan’ is becoming far more common these days, and there’s a variety up for grabs – apartments, townhouses, units and duplexes, although units are the most common in Newcastle at the moment.
While some advice to ‘get in early’ to get the best bargain and have more choice, it’s important you consider all aspects of buying off the plan.
Whether you’re buying a home or an investment property, here are a few points to consider:
Research The Area
Take a careful look at where the development is planned. If there are similar developments planned in the area, it could affect sale prices, clearance rates and vacancy rates. In Newcastle, it’s around 50/50 of ‘off the plan’ units being sold to investors and owner occupiers. Investors should be careful that we do not see a situation similar to that currently seen in Sydney where certain markets are currently flooded by units and prices have come down a little – as have rental prices.
It’s a wise check to see what amenities are nearby and any available public transport – this could mean total reliance on a car.
If the development is at the early stage, ask to see what other building’s are planned nearby – you may end up looking into another property instead of that nice view.
Check The Developer And Builder
Always research the developer to make sure they are reputable and fully funded. Look at the length of time they’ve been in the industry and see if you can look at previous developments to check the process went smoothly.
The same research should be done on the builder. Make sure they have the correct builders’ insurances and also look at previous projects for peace of mind that their work is up to expectations.
Look At The Contract
Always get a legal specialist to check the contract over. For instance, you’ll need to know how long you are tied to the contract by way of the sunset clause or what options or guarantees you have should a developer go under.
Repairs can be expensive if a builder doesn’t get it right, so it’s also advisable to check what warranties and building assurances are in the contract.
Finding The Finance
When you buy off the plan there is usually a period of time, anything from one to three years, between when you put down your deposit and final settlement.
In some cases, the developer may accept a deposit bond or bank guarantee. This means you are not required to exchange actual cash – and it gives you time to save more money, sort finance or even organise the move.
Check to see if you are eligible for some Government incentives. The New Home Grant 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. However, 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.
The $10,000.00 First Home Owner Grant is available where the eligible transaction is for the purchase or construction of a new home with the total value of the property not exceeding the cap amount of $750,000.00.
To ensure you really are buying what you pay for, make sure you have it written into your contract you can have a final viewing of the property before you hand over your money. You can bring a building inspector if you want to help check for defects or poor quality finishes. If you are not satisfied, you can delay settlement until the problem is rectified.
Take Advice From The Experts
We always advise seeking expert legal and financial advice before buying off the plan.
If you want to know more about buying off the plan, our knowledgeable and experienced team can talk you through the process and point out what to look for. With over 40 years of business in the area, we are one of Newcastle’s longest established real estate offices, so give us a call on 02 4954 8833 or pop into our office for a chat.