Buying a Home

One of the biggest advantages of buying off the plan is time. Unlike traditional property purchases with relatively short windows to round up the total finance, you will have at least 12 months, if not longer, to settle. Savvy buyers will take advantages of this extra time to save their pennies and reduce their borrowings.

If you dream of a new home but have nightmares at the thought of building one, an off-plan purchase may be the perfect compromise. Although you will not get to design everything as you would with a custom-built, most off-the-plan developments allow some customisation of finishes and fixtures. Make sure your contract outlines what you can tailor and that you are clear on any additional costs.

Various incentives are still being dangled in front of first-home buyers, which may add to the appeal of buying off the plan.

Concessions vary across Australia and some have been curbed since January 1, so visit your State or Territory website for the latest information on grants and exemptions. You can also research your eligibility for stamp duty concessions on new properties at www.stampdutycalculator.com.au

Off-the-place apartments are often pitched heavily at investors due to the tax* benefits of depreciation on new properties and rental guarantees. Tax savings will depend on your circumstances, but generally, the newer the property, the higher the depreciation allowance for the building and fixtures.

Investors may even be offered attractive rental guarantees for a limited period. Make sure you do your homework on rental returns on similar properties in the area before accepting the developer’s terms. Be wary of over-inflated rental guarantees. Builders will sometimes promise a high-rent yield to lure investors, build the cost into the property price and then subsidise any gap for a short period. When the rental guarantee expires, you may find the actual market rent falls well short of what you originally pocketed. If investing, make sure you have the option to manage the property yourself or with your chosen property manager from the time you take possession.

Many buyers get swept up on a wave of rising property prices when they hand over their deposit in exchange for a floor plan. Historically, property is a consistent long-term performer, but property prices can plateau and even wane at the mercy of economic factors.

Buyers also need to be wary of over-supply, which may devalue their property.

Make sure you consider the bigger picture if buying off the plan. Research how many other developments are planned in the area and whether any increase in apartment numbers is justified by new or improved infrastructure, such as transport corridors, business precincts, universities or hospitals.

Make sure you buy from a reputable builder and take the time to research their previous projects. Do they use quality contractors? Do they deliver projects on time? Make a point of visiting some of their projects to access the finished products first-hand.

Investments like this are big decisions, so investing in the right professionals to have onside before you commit is money well spent. Ensure you get professional legal advice on any contract before you sign it and that you speak with your financial advisor or tax professional to ensure you have the right advice from day one.

• Ensure your deposit will be refunded if the project exceeds a specific date.
• Ensure the contract contains as many details as possible about the finished products.
• Be clear on what finished and fixtures you can customise.
• Find out if you can on-sell during construction in case your circumstances change.
• Ask if you can inspect the site during construction.
• Talk to your mortgage broker about