Commissioner's blog: Buying property 'off-the-plan' in challenging times

This announcement is for: 
Home buyer / owner

The collapse of building projects across Australia, including Perth, highlights the risks of buying property “off-the-plan” at a challenging time for the building industry.

Buying a home or investment property is exciting, but off-the-plan developments can be delayed years, or never proceed, as builders face trades and materials shortages, soaring construction costs and delays exacerbated by the COVID-19 pandemic.

Deposits could be tied up for a very long time, or in some cases lost, if a company is wound up due to insolvency and steps haven’t been taken to secure the money.

Buying “off-the-plan” generally means signing a contract with a developer and paying a deposit today (usually up to 10% of the purchase price), for a project that will be completed in the future. This can apply to vacant land, house and land packages or strata properties, such as units or high rise apartments.

Recently, we saw plans for a luxury Perth apartment tower axed, where half the apartments had been bought off-the-plan. The developer blamed COVID-related supply chain issues for increasing costs by up to 30 per cent and has promised to refund buyers’ deposits.

A contract will generally ensure a deposit is returned if an off-the-plan development fails, however it won’t usually cover compensation. Buyers may have made significant personal commitments (like selling their home) or lost the opportunity to purchase elsewhere, in a rising property market. Changing interest rates or lending conditions may also impact buyers’ borrowing ability over time.

A buyer risks losing their deposit altogether if a developer becomes insolvent and steps haven’t been taken to protect the deposit. A contract should always include a condition requiring the deposit be held in a trust account of a solicitor, real estate agent or settlement agent, and not to be available to the developer until after settlement.

Anyone considering an off-the-plan purchase should be aware of high pressure selling techniques and mindful that design concepts or advertising material may not live up to expectations once a project’s complete. Always compare the advertising material with the contract, as the developer should provide information on any expected variations or substitutions to design, fixtures and/or fittings. Carry out your own extensive research and seek independent advice from a source completely separate from the development proposal.

Further information about buying off-the-plan is on our website at

Gary Newcombe city 2
Gary Newcombe city 2, by CP Media

Gary Newcombe

Commissioner for Consumer Protection


Consumer Protection
Media release
24 Aug 2022

Last modified: