Sydney home buyers may have to pay anywhere between $800,000 to $1 Million in fees to go ahead with homes purchased off the plan last year. Learn how to protect yourself before signing up off-the-plan.
Let’s say you’re an excited first-home buyer now searching the market for that first property to call your own. Realising your cash flow is modest but enough for a down payment – you start to get a feel for the market by speaking with a few real estate agents, maybe you attend a home open or two.
Looking at the homes you can afford on your budget isn’t exactly enticing – at this stage you seem to want more than you can afford. So you turn to off the plan properties as a viable option for your first home. They dazzle you with the reductions to stamp duty for first-home owners; the potential for increased market value once the property is built; the options available for tax benefits and the gains that come from a ‘buy now, pay later’ guarantee. And so the building begins, and you watch on over the months as your dream home is slowly erected into reality.
But, wait a minute, about eight months down the track – the month you’re due to move into your new home – your home isn’t built. You find out the developer is rescinding – and thanks to a sunset clause, you’re now required to pay an additional $100,000 to continue the build.
At this point, you’re a mixture of devastation and fury – feeling helpless with a surprise bill you can’t and shouldn’t have to afford to pay, and an off the plan home that no longer appears to be any closer to becoming yours.
So what can you do to protect yourself?
From development failures and bankruptcy as in the case provided above, to decreased property values and rising interest, often the risks and benefits of off the plan property purchases seem to operate much like a two-sided coin. Which side you land on depends on how prepared you are prior to signing on the dotted line.
Before signing yourself up, consider this checklist as a starting-point to protect yourself from the inherent risks involved in purchasing your first home off the plan.
Ask a Solicitor or Conveyancer these questions:
Seeking legal help will be the number one best thing you can do when deciding to purchase an off-the-plan property. They’ll advise you of any weaknesses in the contract, and do their best to ensure that you’re protected in the case of development failures or cancellations. Be sure to seek advice on the following questions:
- Can I visit the site at any point during construction?
- Is my deposit secure if the building doesn’t proceed or is halted?
- What are my rights if construction is delayed?
- Will I be able to on-sell before construction is completed?
- Will I be penalised for withdrawing from the contract?
- Do I have a say in the unit’s fit out, such as selecting appliances or floor and wall tiles?
- Can I make changes to the finishes in the kitchen and bathroom?
Research your developer:
Pick a reputable developer with a proven track record and experience. This will make it much less likely that mistakes will be made during the construction period, and, if problems do occur, it will ensure a quicker resolve.
View the display property:
This is as close as you’ll come to seeing the finished product if you’re not permitted to go to the site during construction. Carefully inspect the fixtures, fittings and finishes to make sure that they fit in line with what you had in mind. You may want to check whether or not you can make modifications in the event that the finished product is not up to standard – as often, not liking the property from an aesthetic point of view is really a matter of opinion.
Always, always, always have a back-up plan:
The reality is there are few developments that are completed right on schedule. We strongly recommend you come up with a contingency plan to avoid being inconvenienced.
To ensure you are as protected as possible, continue reading the full article on off the plan purchases.
If you require assistance purchasing an off the plan property in Sydney, or if you’re a first-home buyer concerned you might be at risk of a faulty contract, sunset clause or put and call notice, contact CM Lawyers today.