What You Must Know Before Buying Property Off-The-Plan
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In Australia, investment into property can be an excellent financial planning strategy, and there are advantages with purchasing property off-the-plan. A few benefits include:
- Receiving a new house (or apartment) with a contemporary design.
- Avoiding the stress of attending several auctions before landing the ‘right’ one.
- Savings on stamp duty.
We caution Purchasers to be aware of the following matters when purchasing property, especially off-the-plan, because we have witnessed numerous people lose hard earned money due to ignorance or from lack of good legal advice.
- Plans are plans until finalised
The plans you see at the time of signing the contract may not end up being the final product. The developer is at liberty to change the plans at its discretion, or at the request of local council, to suit its building requirements. Notice ought to be given to the Purchaser within 14 days pursuant to section 9AC of Sale of Land Act 1962, and the Purchaser cannot cancel the contract unless the change ‘materially affects the lot to which the contract relates.’
- Position of the dwelling
Your plan ought to show you the exact location of your property, however, you may not have any control over the surrounding, for example whether your property is next to a pond, garden, petrol station, industrial factories.
- Facilities within or near the proposed site
Property investors must research the surround area to ensure adequate facilities and services exist or will be constructed and installed, for the needs of their family and the growing population. Some such facilities include schools, hospitals, shopping centres. It is reported that Melbourne’s outer growth corridors may end up looking after more than half of new students. The suburbs of Wyndham, Cardinia, Melton, Whittlesea, Hume and Casey each need at least ten new schools to absorb the growing number of students (more than 10,000) within the next 10 years.
- Contract conditions
Read the terms and conditions of your contract carefully. You should not be surprised to read that the developer holds the right to change the finishes and materials of the dwelling. This is one of the ways they seek to increase their profit without you even knowing it. With the result, you may end up with a home that is not made to the same standards you initially had in mind.
- Unknown settlement date
A builder can give you an estimated date of completion of the construction project, but there is no guarantee if the construction will be interrupted or abandoned. There are different grounds for terminating the contract of sale. If this occurs, the Purchaser can get a refund of the deposit, but will probably lose time and opportunity because of the failure to complete.
- Exemptions and concessions
Purchasers of property off-the-plan want to get the benefit of stamp duty savings. Be careful to keep currency with latest changes to the law. Eligibility requirements changed after 1 July 2017 so check the conditions or come and see our lawyers or conveyancer for advice on what tax concessions avail to you.
- Property prices fluctuate
The time from the signing of the contract to purchase until the settlement finally taking place could be a long time, and in the meanwhile property prices may rise above or fall below the price of your property! Take note of this time lag and the fact that many circumstances may change in the interim. In the past, unscrupulous developers cancelled contracts to take advantage of increased market prices. However, the Sale of Land Amendment Bill 2019 require the Developer to exercise sunset clauses only when the Purchaser also consents.
Good property investors don’t rush. They get good professionals on their side for relevant advice and to understand the potential risks, in order to make a good decision.
Disclaimer: The information contained in this article is not legal advice. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the Content is current, but we do not guarantee its currency. You should seek legal or other professional advice before acting or relying on any of the Content.