If you’re thinking of buying off the plan property in Sydney’s Inner West, you might want to also think about speaking to a property lawyer. Like with anything big, there are always upsides and downsides, as well as little things to trip you up, and this is where a conveyancing lawyer can help you. Before you go and see a lawyer though, why not read through this basic guide to off the plan real estate?
Let’s start at the beginning: what on earth does ‘off the plan’ mean? What it all boils down to is buying something that doesn’t yet exist. For instance, if you choose to buy a unit in an apartment complex that hasn’t been built yet that’s buying off the plan. Often this occurs when a block of land is being subdivided, and the seller isn’t certain if all the smaller lots will sell. They then sell off the smaller lots and the subdivision is registered. So what benefits are there to buying off the plan?
One of the biggest reasons people choose to buy off the plan is because there are savings in stamp duty fees. Since stamp duty is calculated by the value of the land building at the time of the contract of the sale, if there is no building, you pay a reduced amount of stamp duty. To find out the cost of construction and the like during the contract period to help you work out your stamp duty concession, get the seller to provide you with a copy of the Land and Building Packages statutory declaration at the time of settlement.
Money is a strong factor in choosing to buy off the plan. One reason people choose to buy off the plan is because it is often a far cheaper purchase price. This is because the developers are trying to sell as many properties as quickly as possible, so pricing becomes extremely competitive, and this only ever benefits the customer. And not only do you get a lower purchase price by choosing to buy off the plan, you also have the advantage of lock in prices. Lock in prices are common with off the plan properties, so while you pay one amount for your property at the beginning of the development, the market may continue to grow and the value of your property will increase without you having to spend any money.
Another benefit of buying off the plan is that you are given a little more freedom as a buyer. One way is that you are actually given time to save up to cover the standard 10% deposit by means of a deposit bond. This can be a great selling point for first-time home buyers, or people who stumbled upon their perfect home before they had time to save a large amount of money. The other way you have more freedom is that even though your property might be part of a set development you can have a say in design and finishes for your property, so you can customise your home before you even move in. Of course, it can’t all be good, and there are disadvantages to everything, including buying off the plan property.
A major problem when it comes to buying off the plan is the length and complexity of the documents related to the sale. Many people don’t realise the detail and strictness of the restrictions they’ve bought into. This is why it’s a good idea to get a lawyer to go through the documents before you sign.
Another big problem with off the plan purchases is that you might not get anything at all. There is a time period within which most developers aim to have their developments registered as subdivided. If the properties aren’t registered as subdivided by this time, or subdivision and the development is refused, contracts can be cancelled and you’ll find yourself having waited anywhere from eighteen months to 3 years for a home that can never exist.
Sometimes the developers have to change the dimensions of properties because the local council have placed restrictions on them. This means that you may think you’ve bought a certain amount of land, but now it has been reduced or changed. Many developers will include in their contract that you can’t walk away from the contract because of changes to the dimensions of the area purchased.
Finally, there’s always the risk that after months or years of waiting, when the development is completed, you may not actually like what you’ve got. You can only visualise so much, and it will never compare to the actual, real-life thing. For instance, you might think that there won’t be a noise issue with neighbours, but after a few nights in your new home, you realise that you’re all so close together and the walls are so thin that you can hear every word that’s said.
There’s nothing wrong with choosing to buy off the plan, nor should it be the only choice you have. Think carefully about what you want, and what you’re willing to risk to get the home you want, and don’t be afraid to ask a property lawyer for help in understanding what’s going on.