Should You Consider Buying An Off-The-Plan Property?
Buying an off-the-plan property effectively means that you’re entering into a legally binding contract to purchase a property when it is a blueprint. Buying a property that hasn’t come up yet may seem odd to some, but it has the potential to turn into a good investment for some people. Your estate agent can help you establish whether this investment is worthwhile based on your personal situation, but here are some considerations to establish whether off-the-plan properties are a smart investment for you.
Benefits Of Buying Off-The-Plan Properties
There’s no doubt that buying an off-the-plan property can have significant financial gains for a buyer, especially because you’re bound to get it cheaper before it actually comes up. When buying an off-the-plan property, you get access to a fixed price from the word go, which can prove to be an advantage in a market fuelled by high demand with auction rates at record highs. The certainty of fixed listing prices means you can better plan your future and lower your financial pressure tremendously.
First-time home buyers in NSW have access to a First Home Owner Grant for new properties bought after 1 January 2016 for an amount of $10,000. First home buyers may also be exempt from stamp duty under certain conditions stipulated by the NSW government.
Risks Of Buying Off-The-Plan Properties
While a few investors have made money buying off-the-plan properties, the road is littered with others who haven’t been as successful. Some of the risks associated with off-the-plan properties are:
Different layout from what you anticipated upon completion of the property.
The ambiguity of contract terms is a huge factor in disputes arising from off-the-plan agreements.
Delays in construction mean that you get possession of your new home later than you anticipated.
Poor disclosure of all the amenities and standard of finishes provided to you.
Paying rent while the property is being developed can end up being more expensive overall than buying an older property downright.
Implications From An Insurance Perspective
The developer is legally responsible for providing home insurance cover before entering into a contract for the sale of an off-the-plan property. The Home Building Compensation Fund covers the owner of the property for loss or damage if the builder was unable to complete work or has breached any contractual terms.
Market For Off-The-Plan Properties
Fluctuation in the market price and more housing developments in the area may influence the resale value of your property once it is completed. You must do proper research to know more about infrastructure projects in areas where you expect to buy off-the-plan properties. The right choice can make your purchase well worth it when you consider the real estate growth potential. This can maximise your opportunity for capital growth and rental yields in the future.
With so many factors to consider, off-the-plan properties are certainly a smart investment for some, but it may not be for everyone. If you’re looking to buy an off-the-plan property, make sure you research the developer and the area where you plan to buy properly. You can avoid problems when you buy from developers with good track records.