Buying off the plan benefits :
- Stamp duty savings (not all states). Stamp duty for a completed property accounts for more than 5% of the purchase price. When buying off-the plan stamp duty is charge on land value plus value of improvement at the time of signing of contract for home owners. Stamp duty saving for investors has been abolished since 1st July 2017. For Downsizers buying a completed 1.5 million apartment stamps could come to $82,000!
- Only 10% deposit is required and the rest is paid at settlement which could be 6 months-2 years away. Gives you the chance to secure the better unit at an earlier stage of a development.
- Modern features
- Flexibility to choose or customised floor plans to suit
- You will have a new property with less maintenance for a good 5 to 10 years.
- It may give you a chance to resell before settlement if market permits it.
- Tax deduction for depreciation if buy for investments
- Latest amenities- for example gold driving simulator
- Newer projects are build to better standards
- Newer projects may also be environmentally sustainable and Energy efficient
Buying off the plan risks :
- You can’t see the end product until final inspection time. You may not be happy with the end result. It is important that you buy from a reputable developer who has a lot of experience in delivering a product that is acceptable and has good follow-up service. Always have a solicitor check the contract before signing to make sure all inclusions are reasonable and of commensurable quality. If you pay $10,000 per sqm then you should expect premium quality of fixtures and fittings.
- You could pay a premium price for something brand new.
- The market could take a dive at time of settlement. A good rule of thumb is to make sure you have at least 30% buffer to protect against a low valuation if you are depending on a bank loan to finance this purchase. Property investment is a long term commitment to realise capital gains.
- Your financial situation might have changed and hence you may not be in a position to settle. If something unforseen should happen make plans early in the piece to off-load the property. The nomination clause will allow you to nominate a different buyer.
- Potential for project not to proceed
- Maybe hard to gauge the quality of the development