Purchasing a home off the plan offers numerous advantages, but it is still a new concept to many Australians.
There are advantages and disadvantages to every decision in real estate. The most important consideration is what you can afford and how you want to live. When dealing with a real estate developer or seller, it’s critical to have a list of questions ready.
Here are eight of the most often asked questions from first-time off-the-plan property purchasers to help you determine if it’s right for you.
HOW MUCH OF A DOWN PAYMENT DO I HAVE TO MAKE IN ORDER TO PURCHASE OFF THE PLAN?
You’ll most likely have to pay a 10% deposit when you sign the contract, with the remaining balance owing after the project is completed.
Most of the time, the developer is compensated with interest on the escrow payment. This is a good issue to ask the salesperson, since you may be able to work out a deal with the developer to split the interest payments.
A solicitor’s trust account will hold your deposit until the project is completed or the registration/sunset time has expired, whichever comes first.
HOW LONG DOES IT TAKE TO BUILD AN OFF-THE-PLAN APARTMENT?
Depending on the size of the structure, construction durations might vary significantly, with larger residential buildings typically taking longer to complete.
WILL MY APARTMENT LOOK EXACTLY LIKE THE ONE ON DISPLAY?
Because there are typically many different apartment types within each building, the display suite will be a good indicator of how high the quality of your apartment’s finishes will be. However, beyond that, you’ll need to inspect what you expect and ask the sales consultant how the quality of your apartment will differ from that of the display suite.
Ensure that the display is consistent in terms of the measurements and layouts of the kitchen, bathroom, bedroom, and living room.
DO YOU PAY STAMP DUTY WHEN YOU BUY A Property BEFORE IT’S BUILT?
Some factors will determine whether or not you have to pay stamp or transfer duty on your brand new off-the-plan apartment, including the state in which you acquired it, its cost and whether or not you’re a first-time home buyer, owner occupier, local investor or international investor.
Stamp duty may be reduced in most states, however, through incentives and concessions. As an example, in Victoria, the off-the-plan duty concession means that the dutiable worth of your property is computed as the contract price minus any construction costs accrued after the contract date. You’ll pay less stamp duty if you and your property match the eligibility requirements for this discount.
BUYING OFF-THE-PLAN, WHEN IS THE FINAL PAYMENT DUE?
Your contract should outline the specifics of the settlement process; nevertheless, as a general rule of thumb, you will be required to pay within two weeks of the unit’s plan being registered with the municipality.
IS IT POSSIBLE TO RECEIVE A MORTGAGE TO PURCHASE A HOME OFF THE PLAN?
Yes, you will have a mortgage on the property once the property is completed but not during the construction period of an apartment building or townhouse. However, if you are buying a House and Land Package then you will be required for a construction loan. It is advisable to consult with your bank or financial advisor in order to discover the loan that is most appropriate for your needs. Greenshoots has covered this topic extensively in our blog house and land package all you need to know. (blog link to be added once uploaded)
IN THE CASE OF OFF-THE-PLAN PROPERTIES, WHAT ARE THE LEVIES OR STRATA FEES?
If you live in a strata plan, you must pay an annual levy to the Owners Corporation, which goes towards managing and maintaining the building and shared areas.
According to the facilities and the number of flats that contribute to the building’s maintenance, a levy is often paid quarterly.
The fees will increase or decrease depending on how many lifts there are, gardens, swimming pool… the bigger the building the more shared that cost will be.
Remember that part of the strata fee goes towards saving into savings account for the building so in the future it can be repaired without any additional contribution from the owners.
IS IT POSSIBLE TO HAGGLE ON THE SPOT?
There may still be room for negotiating when it comes to off-the-plan properties.
If you want to get in on the ground floor of a hot property when it first hits the market, or even during pre-sales, you’ll want to act quickly.
Only the most frequently asked questions are included here. In fact, the actual list is quite extensive. Greenshoots will gladly answer your questions. Please contact our property expert Pina Brandy and sign up for our newsletter to ensure that you don’t miss out on any useful information.
