What is Buying Off the Plan
Many unit developments are marketed and sold before the building is complete or even started.
Developers can lock in purchases to give them some certainty before starting to build. Often a certain percentage of units will have to be sold before construction starts. There are also some advantages for buyers.
What are the benefits to you as a buyer? If you buy off the plan you may be able to secure a unit at the price payable today and then keep saving before settlement in a year or two. Often the deposits are lower than the normal 10% or you have time to pay the deposit. You can select the colour scheme for the unit rather than buying something that was not you taste.
Finance for Off the Plan
Usually a Bank will only provide unconditional finance approval for a fixed period of time. Often the completion time for an off the plan is longer than the finance approval will last.
It is vital that you have indicative or conditional approval from your Bank before exchange. As the development proceeds you can then work in with your Bank for final approval and loan documentation closer to settlement.. You should also consider what your financial position may be like in the future and how that could impact on your finance approval.
Developer May Cancel the Contract
Most off the plan contracts have a provision that allows the Developer to cancel the contract. This may be if the plans are not approved or if there has been significant delay. It is unusual for a Developer to make use of this provision but it does happen.
If the contract is cancelled then your deposit will be refunded so you are not out of pocket.
Usually stamp duty on a .non off the plan purchase is payable 90 days from exchange. From a practical perspective a Bank will require stamp duty to be paid before they advance funds so the duty is payable before settlement. This may be 28 days from exchange.
Stamp duty on an off the plan purchase is different. You have 12 months to pay the duty (unless certain other events occur ie a certificate of completion is issued, settlement occurs, you on sell the property etc.).
As an off the plan is a new property eligible buyers may be able to apply for a home buyer concession. We can talk with you about your specific situation regarding stamp duty, time for payment and concessions.
Building - Buying a Block of Land
Building a new house can be exciting and challenging. You may want to buy a block of land and then enter a contract with a particular builder.
Because land in the ACT is held as leasehold you need to have Ministerial Consent to transfer blocks of land. The seller needs to have a reason for the sale, the building covenants need to have enough time to allow for the commencement and completion of the build and the buyers need to show they have the financial ability to build on the block. We assist you with completing the application for Ministerial Consent.
Land rent contracts are growing in popularity and we can help you with this particular issue.
It is vital that the building contract covers certain key points. The standard HIA or MBA contracts are useful but they can be changed with special conditions. We work through the building contract with you to check all is in order.
We need to consider if the inclusions are comprehensive, what happens if you want to make a variation and ensure the Bank agrees to the progress payment schedule.
It is vital issues are sorted in the initial contract rather than allowing problems to develop down the track.
Exchange of Land and Building Contracts
We work in with you to ensure the exchange of the land and building contracts are timed correctly.
You do not want to exchange on a building contract if you have not secured the block of land. Similarly it not ideal to exchange on the block of land and find you have problems in getting a builder to build your home at the right price.
How We Can Assist
Whether you are buying a unit off the plan to live in or as an investment we can assist in ensuring the contract is in order. We meet with you to review the contract and make sure the key issues are covered before you commit to exchange of contract.
When you want to build a new house we can assist in ensuring the contract for the land and the building contract are in order.