by David Howard
Making an off-the-plan property purchase – when the final product is not yet complete – may seem like a big commitment, but there are a number of benefits which make this an attractive option whether you’re an investor or first home buyer.
Does buying off the plan make sense for first home buyers?
There are a range of excellent government incentives available when purchasing off the plan for those looking to get a foot in the door and enter the property market – making the great Australian dream of owning a property closer to reality.
First-home buyers can take advantage of many benefits for properties purchased off the plan, including significant stamp duty savings.
Purchasing a property off-the-plan also gives you the ability to secure the property without having to pay anything for 12 to 18 months, except for a deposit. This means you’ll have more time to continue to save while the property is being built.
Another significant benefit of buying off the plan is the low upfront commitment required. Generally speaking, buyers only need to pay an initial 10% deposit on the property, with the full balance payable only after settlement.
Buying off the plan also gives you more flexibility to customise your property or make certain changes to fittings or fixtures prior to construction. That means being able to tailor your first home to suit your individual tastes.
And while some purchasers may have concerns about the end result when buying in the concept phase, in reality it is uncommon for developers to change the original design of the proposed property. In the event a change does occur, it is usually from a construction standpoint to allow for things such as services and the purchaser would be kept informed.
Is buying off the plan a good investment?
Purchasing a property off the plan can be a prudent choice for investors for a variety of reasons.
For property investors looking at purchasing off the plan it’s also worth considering the substantial property depreciation benefits available with a brand new property.
Tax allowances on investment properties can add up to significant savings and can also free up your available cash flow once it is generating a rental return.
Savvy investors then have the option of putting these savings towards loan repayments or to help save for future investment properties.
Importantly, buying off the plan gives you an additional level of comfort and peace of mind, knowing that the property you purchase will be brand new and ready to move into (or put tenants in) immediately. This means initial maintenance costs will be minimal, with further protection provided under the building and manufacturers warranties.
The low upfront deposit on off-the-plan developments is further good news for investors as it means they won’t have to tie up large amounts of capital straight away.
What is the Sunset Clause?
Sunset Clauses are generally included in off-the-plan contracts of sale as a means of protecting the interests of both the developer and purchaser. The clause refers to the maximum time in which the developer has to complete the project and ensures the contract is not open ended. If for whatever reason the development was still not completed by the stated date, the contract becomes void.
At Castan Gilbert, we specialise in selling established and off-the-plan properties in Melbourne’s premier suburbs. Our extensive local market experience means that we understand what makes buyers tick, and can help you with purchasing a home that you’ll love – and one that will deliver strong capital growth into the future.