Buying Off The Plan – Is It For You?

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Buying ‘off the plan’ is a way to buy property –it refers to the practice of buying a property that is either still in the planning stages or still under construction.

A buyer purchases based on the plan and design of a property rather than viewing an established home.

Who buys off the plan?

Anyone can buy off the plan – first home buyers looking for a home to raise a family, couples and singles moving into a townhouse and downsizers moving from a house to a unit or apartment.

As with other ways of purchasing, there are pros and cons to this method of buying a home.


You are the first owner

Your property is brand-new!  Nobody has lived in it before, so you can put your own stamp on it – and there is no wear and tear to worry about. New builds are more energy-efficient, more environmentally-friendly and have the benefit of being built using the latest building materials and techniques.

Financial Benefits

When you buy off the plan, you pay a deposit at the time of signing the contract sale. The settlement date is generally a lot longer than with an established property, meaning you have a lot longer to save money to put towards the settlement of your property or to furnish and decorate your new home.

If your deposit is being held in trust under the settlement date, you may also have the option to earn interest on the money while you wait for your home to be finished.

Government Incentives

Buying a home off the plan means you may be exempt from paying stamp duty. In addition, the Victorian government has now made the First Home Owner Grant eligible only to those who buy or build a new home (with other eligibility criteria you can see here).


Limitations on Choice

Depending on the builder and the type of property you buy, you may have a limited choice of designs, fixtures and fittings for your new home – or the option of paying substantially more to customise to your taste.

Financial Risk

There is always the possibility that the developer or builder goes bust along the way – depending on the terms of your contract, you may not even get your deposit back, let alone the home you were expecting.

Note: we encourage having your new home contract reviewed before you sign anything. Once peen is put to paper on a contract, things get a lot more complicated.

Long Waits

Buying an established home usually means agreeing to a settlement date of between one and three months. Buying off the plan can mean waiting for up to 18 months for your new home to be ready. This can mean having to make interim living arrangements for your family, possibly extending these or going to a ‘plan B’ if your new property falls through.

Something Else to Consider

When you buy off the plan, bear in mind the impact that changes in market conditions can have on your financial situation while your home is being built – for example, fluctuations in interest rates and changes in property values.

If the value of your property decreases, for example, your loan-to-value ratio will increase, meaning you may have to pay (or pay more) lender’s mortgage insurance.

On the flip side, an upswing in property values or decrease in interest rates throughout the build period may mean you are in a better financial position when it comes to settlement date.

Question to Ask Your Developer

What will the timeline be?

In many cases, your developer will only appoint a builder once a certain number of lots have been sold.

Buying a house and land package on a new development?

Time has to be devoted to preparing the land, carrying out earthworks, sewerage and drainage, road construction and the installation of essential services such as phone and internet.

Do your own research in finding out what new services and infrastructure will be included as part of the development- or what already exists (or is planned) in the area you are planning to move to.

What is the schedule of payments?

As with other methods of buying, you are required to pay a deposit to secure the property.

Then, depending on the type of property that is being built, you may either enter into a one-part contract (generally for townhouse and apartments). This comprises a 10% deposit and the balance upon completion, or:

a two-part contract (more commonly used for house and land packages). The first contract is for the land and the second is through the builder, with staged progress payments required.

These contracts can be complicated. If anything is unclear, make sure you get the information you need before signing a contract.

What options do I have for internet connection?

This gives you time to contact suppliers and see what services and pricing options they offer.

How much choice will I have in the design of my home?

It’s a good idea to clarify what can be customised or changed throughout the build process. Deviations from the standard building package many incur substantial extra charges.

What other fees and charges can I expect?

Body corporate or strata fees can add a substantial amount to the yearly costs of owning your new apartment or unit.

Find out what fees you are liable for and what amenities, services and common areas these fees include.

Find Out More

Consumer Affairs Victoria

State Revenue Office Victoria

How can The Home Inspection Hub help?

Before You Commit

Contract Review

 A new home contract can be a lengthy and confusing document with lots of jargon. One of our experienced inspectors can review your contract, explain anything that needs clarification and ensure that the contract is in line with industry standards.

During the Build

New Home Construction Inspections

An independent, comprehensive inspection at each stage of your new home build will ensure your home is being built to plan. We carry out inspections at the base, frame, lock-up/pre-plaster, fixing and handover stages.

After The Build

Maintenance Inspections

During the maintenance period of your new home build, your builder must fix any additional defects that become apparent. Our independent, thorough inspection will highlight any issues or defects that need to be rectified.

Are you building to invest?

Tax Depreciation Schedules

If your newly-built home is an investment property, maximise your tax deductions with a tax depreciation schedule. A tax depreciation schedule is a comprehensive report that outlines the construction costs and asset values of your property, as well as an annual estimation of the property’s depreciation due to wear and tear.

To book any of these services, or to see how we can assist with our full range of residential building inspections, call our office on 1300 071 283, email or start your free quote request today.