Buying off the plan
One option for building, which involves some risk and the possibility of delays, is to buy "off-the-plan", which includes buying:
- a project home; or
- an apartment
before the plan (or development) has been approved by the local authority and registered at the Land Titles Office of the Department of Land Information. In other words, the piece of land does not yet have its own certificate of title.
The term "buying off-the-plan" as described here does not include buying a block of land without having viewed the property before sale.
When buying "off-the-plan", you generally view an architect's impression and a floor plan. You will be asked to sign a contract with a developer, such as an Offer and Acceptance contract for the property you are buying. You generally pay a deposit, which is held in a trust account and it is necessary to pay the balance of the purchase price once the property is completed and the certificate of title for the property has been issued.
Pros and cons of buying "off-the-plan"
The advantages may involve:
- getting a place in a popular development; and
- securing a good price if market prices are rising.
The disadvantages may include:
- not knowing what the finished product looks like in reality;
- the possibility of delays in completing the project (and moving in);
- not knowing (and not being able to choose) the builder as the developer chooses the builder (and generally after you have signed the relevant contracts); and
- the possibility that you'll be locked into a price if market prices are falling.
Note: Home indemnity insurance is not available for multi-unit developments that exceed three storeys in height above ground and/or which have two or more basement levels
Checklist for buying "off-the-plan"
- Take a copy of the sale contract to a lawyer to minimise your risks.
- Check for provisions in the contract such as the completion date; whether you are entitled to resell the property before you complete the purchase and whether you have the right to a pre-settlement inspection.
- Visit any other projects that the developer is involved in, to find out if the projects are on schedule and if the quality of the work is good.
- Find out how much of the development has already been sold.
- Get a copy of the plan and get the plans and specifications checked by an independent architect or building consultant.
- Check the plan for car parking, any amenities in the complex like swimming pools, spas and saunas and whether strata levies apply.
- Choose your own licensed valuer to value the property.