Is It Cheaper to Buy Property Off the Plan?
Buying off-the-plan means that a client agreed to commit to purchasing a house or unit before the building has been built. For prospective buyers, buying off the plan can be rather affordable and flexible compared to buying a property that has been established.
Developers often offer lower prices and financial incentives for buyers to secure the project, especially before the construction begins. The contract price is locked in at the time the contract is signed. The property may increase in value as it is developed, providing the buyers with capital growth before the property settles. Nevertheless, the contract price does not change even if the property increases or decreases in value throughout the build.
One of the greatest benefits of buying off the plan is that buyers can further save a lot of money on stamp duty. Most suburbs grant greater discounts and higher tax deductions on newly constructed properties. If a buyer decides to sign a contract before construction begins, stamp duty will only apply to the land value, not the finished product. Therefore, investors are often attracted to off-the-plan sales as they also pay less land transfer duty than they would for an established house or unit.
For first home buyers, off the plan is a great way to get your foot into the property market with a $10,000 First Home Buyers grant eligible for those buying for their personal place of residence.
Besides that, buying off-the-plan also indicates that buyers have more input into the property’s design. Buyers can be involved in designing the floor plan to customise their property. Protection in a form of warranty insurance from the developers will also be offered while the property is being built. This protection gives the buyers rights to request for repairs if certain structural or interior building faults apply.
Since the buildings are brand new, these properties are more energy-efficient and in better condition than older homes. This means that buyers will more likely to save on repairs and utility bills in the months and years ahead.
In addition to that, buying off-the-plan provides buyers with extra time to get finances in order. They are only required to place a 10% deposit to secure the contract. They can have an extended construction time to save up the outstanding balance.
The potential risk that prospective buyers need to be aware of is the plausibility of developers’ bankruptcy. Unfortunately, the development of the property cannot proceed and buyers will end up losing their deposit money. To avoid this risk, do your research and also contact your local agent to find out about developers’ past performance such as evidence of past projects, reviews from previous clients and media reports about the quality of their work.