If you’re thinking of buying “off the plan” (buying a property that is yet to be constructed or doesn’t yet have it’s own individual title), here are a few handy hints to know before you put pen to paper:
- Be aware of the risks – One of the risks of “off the plan” purchases is that they are partly speculative in that property prices, market conditions, lending criteria and your personal circumstances can all change between when you enter the Contract and the often protracted settlement period. You must be confident that you will be able to settle when settlement falls due. Penalties will apply if you are unable to settle on time.
- Know what you’re buying and get it in the Contract – Ensure that a clear copy of the architectural floor plan (with measurements) is actually stapled to the Contract rather than the tiny, unmeasured ones that that often find themselves into many Contracts. Maybe even use the “Floorplates” the Agent has used on the glossy marketing brochures if they’re pretty large, as well the architectural drawings (if possible) showing ceiling heights, room dimension and other details. Also, if you’ve negotiated some changes to the property, be sure to have them clearly noted in writing in the Contract and on the floorplan. If there are problems later on just prior to settlement when construction has been completed, the Contract is the overriding document evidencing what you initially committed yourself to buy. If what’s in the Contract is ambiguous, your right of recourse becomes very limited.
- What’s my registration period or sunset date? – This is the time frame noted in the Contract within which the Plan of Subdivision must be registered by. Both parties (you and the Vendor/Developer) are bound to the Contract for this period (often 36 months) from when the Contract is dated. If the plan of subdivision and certificate of occupancy has not occurred before this date, then the Contract may be ended by ether party. If this time frame is unacceptable to you, you should cross out (where possible) the period stated under “Registration Period” and insert a period more appropriate for you that would be the latest possible time that you would be prepared to let the property go if it took any longer than the date you specify. You cannot necessarily rely upon a Selling Agent’s estimation of the expected completion time. It is probably well-meant, but should be seen as a guide only. The Contract overrides any promises, claims or information provided by the Selling Agent.
- Be flexible and be patient – What is often forgotten when buying off the plan is the effort, risk and money a vendor/developer is expending in getting the project up and running and then completed. The vendor may be required to vary the property and the works as it (or a government authority) deems appropriate and both parties are largely committed to continue with the Contract in most situations. Changes may be required to the size, number and location of apartments as well as the apartment’s and development’s fittings, facilities, plans and specifications. This requires some flexibility from you as a buyer as well patience when construction delays and the even legal process getting the Plan of Subdivision registered exceeds your initial time expectations.
Buying off the plan can be exciting – you end up with a brand new property to enjoy as well reaping the rewards of possible stamp duty savings along the way (in certain circumstances). It is important to note that the above information is general in nature and may differ in your circumstances. The safest way to “go in with your eyes open” when buying off the plan property is to have your Contract professionally reviewed before your commit yourself to buy. They are often very large Contracts that contain complicated Special Conditions and are quite difficult to understand for most buyers. So, if you’ve found the property you want to buy and you’re ready to purchase, head on over to our home page, click on the Contract Review banner and you’re one step closer to making your property dream a reality.
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