Your expert guide to buying off-the-plan land

How you can make the most of Victoria’s current Stamp Duty discounts
March 22, 2021

What to look out for when buying off-plan– the plan land

Here at Fastrack Conveyancing, a huge part of our day-to-day business is guiding buyers through buying off-the-plan land. That means we know the process like the back of our hands.

With over 35 years’ experience between directors Tammy D’Amore and Justine Kitchen, their insights into off-the-plan purchases are invaluable. Here’s their guide to keeping you on course. 

Essentially off-the-plan means buying a block of land within a subdivision that’s still under development. The developer offers the land for sale before registering the Plan of Subdivision.

What are the benefits of buying off-the-plan?

Generally buying a block of land and then building your home is a more affordable entry point into the property market and offers buyers more flexibility on the type of home they want. This makes it a particularly good option for first-time buyers, who can then access concessions on stamp duty and government grants, further bringing the cost down.

“It’s appealing because you can pay your deposit, then potentially add to your savings before you have to pay for the balance at settlement and then the build,” Justine adds. “That breathing space means you get to keep more money in your account while you save, so hopefully you’ll accrue a bit of interest on it too.”

“It’s also attractive because people can have a direct say on the type of house they want to build, fitting their needs and budget, rather than buying into an existing property where they may have to make more compromises,” Tammy says.

You’ll also lock in today’s prices. That’s no small mercy when the market sometimes seems like the only way is up, particularly in cities like Melbourne.

Be patient, be prepared

The benefits are obvious, and thousands of Australians buy off-the-plan land each year, many with the aid of experts like Fastrack Conveyancing. But there are possible pitfalls.

The best-laid plans can go awry. “Often you’re opting in many months before development begins, and there are many variables that can push that start or completion date out,”  Tammy cautions.

Development works may take longer than predicted, with delays potentially caused by things like planning approval, inspections by authorities and weather conditions. “At Fastrack, we check in regularly with the developers for updates on the progress, so that we can keep our clients informed,”  Justine adds.

Get your finances in order

Delays can affect your finance. “The loan approval/pre-approval you have in place or enquired about when signing the Contract might have lapsed when it comes to settle,” Tammy notes. “So buyers will need to apply or reapply for their loan once they are notified by the Vendor that settlement is approaching.

“If the property market slows in the meantime, the valuation may not be sufficient for what you’re paying. Or your circumstances might have changed: If you change jobs, for example.”

These are all things to be aware of to ensure you best manage your own position.  You can also seek advice from financial advisers to help you understand the best position.

It’s not all doom and gloom, Justine assures. “Delays can just mean more time to save. The deposit, held in a trust, cannot be more than 10%. We recommend trying to negotiate a lower deposit if you can, so you can perhaps earn more interest on your savings while waiting for settlement.”

Check your contract

Fastrack suggests speaking with your bank or broker before entering into the Contract and also engaging a conveyancer experienced in off-the-plan matters.

“Here at Fastrack, we specialise in off-the-plan,” Justine says. “We can advise you clearly on your Contract before you sign and also help negotiate any unfavourable conditions on your behalf.”

If you buy off-the-plan, the developer will generally have the right to make some amendments to the Plan of Subdivision and the Fill/Engineering Plans. “There’s a legal requirement that they notify the buyers and, if the change materially affects you, there may be right to terminate the Contract,” Tammy adds.

It’s all about being prepared. “Buying off-the-plan takes vision to see beyond a muddy paddock, but as long as you’re aware of the potential issues and manage the risk, the benefits are very appealing,” Tammy insists. “You just have to do your research and due diligence before you proceed, and Fastrack can help with that.”

If you’re considering buying off-the-plan, get in touch with one of Fastrack Conveyancing’s experts today on 03 9915 5790 or email us here.

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