Pros and Cons of Buying Off the Plan

Jayde Ferguson

So you’re in the market to buy a new abode. There is a wealth of options to consider, including ‘buying off the plan.’ Essentially, the term means purchasing a property that is yet to be built. To make the decision, you’re given images of the proposed building and architectural plans, in addition to contractual, legal and financial information. 

Before you decide whether this option is right for you, ensure that the property is financially feasible and that it meets all Australian legal requirements, as well as a full evaluation of all technical features. Getting familiar with both sides of the spectrum will help you make a smart investment decision.

Pros: Why Should You Buy off the Plan? 

If you choose to invest in a property that hasn’t been constructed, you’ll enjoy perks such as:

•Freedom: Buying off the plan opens up doors to tailored design possibilities, letting you truly customise your space from the inside out.

•Alternative deposit options: Depending on your builder, you may be able to pay in unique increments such as lower cash deposit, a bank guarantee or deposit bond. 

•Tax advantages: Some states offer bonuses and reductions in stamp duty, which can save thousands.

•Savings: The prolonged settlement period gives you more time to put away cash.

Cons: What are the Risks of Buying off the Plan? 

As with any purchase of property, there are always challenges to consider. Keep in mind:

•Delays: Unforseen complications could stall construction, pushing back the date of completion.

•Expectations: Although you may have looked over an outline, the project may turn out different than expected. The finished product may not be exactly what you were after.

•Less return: Potential capital growth may be less than expected.

•Bankruptcy: The property development could go into liquidation before completion, putting your deposit in jeopardy.

Remember that a good investment should increase your income over time. By having a realistic idea of the positives and negatives of buying off the plan, you’re more likely to make the right decision for your financial situation. If you do choose to buy off the plan, be sure to:

•Visit the property site and check out the location and thoroughly investigate any plans or the display home.

•Research marketing conditions and talk to an expert about property prices.

•Meet with the developer and discuss your expectations.

•Focus on the property’s investment value as a whole when making your choice.

•Lock in a price: Buy at today’s price for tomorrow’s value, reaping the benefits of any increase in the market.

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