off the plan
If you are looking at purchasing an apartment, townhouse or unit that is not yet already built, you might be asked to sign up to an off the plan contract. It is a very exciting time for you and despite there being many great cost benefits in buying off the plan you must be aware of the risks and the differences that these contracts have as opposed to other ordinary contracts.
Our experience in dealing with off the plan contracts has shown us that buyers are not always aware of what they are signing up to, so please slow down and take the time to read the following.
What is an off the plan contract?
An off the plan contract is a contract for sale or purchase of a residential property, where the property does not exist at the time of entering into the contract.
Is it cheaper to buy off the plan?
One of the many great cost benefits of buying off-the-plan is the ability to save on stamp duty fees if you intend to live in an off the plan build once it is constructed. Given that an off-the-plan property is a ‘new build’, buyers may be able to reduce the cost of their stamp duty fees or dissolve the cost entirely. Special rules can also apply to first home buyers and pensioners.
What should I look for when buying off the plan? What are the risks to buying off the plan?
You might not always get what you think you are paying for. Some other properties in the development may have already been built and you can inspect those, but you probably will not be able to inspect the property that you are purchasing, as it will not yet have been built. All you will be shown is the marketing material.
The contract you enter into will be conditional upon the property being built, and being registered with the Titles Office. This means that there may be differences between what you think you are paying for, and what you actually end up with. Essentially the developer can change the layout or position of your unit in order to comply with water, drainage and council requirements.
A large number of off the plan contracts will provide for variations, so the layout of the unit may change from that which you viewed, the location of the unit may change, the view from the unit may change, the bike storage facility may change, and the finishes and fixtures and fittings such as kitchen units may change, although they must be of a similar or better standard. Usually, you cannot object to any of these changes, unless the change materially disadvantages you.
What is a sunset clause
All off the plan contracts have a sunset clause. A sunset clause is a clause that stipulates something must occur before a particular date. In an of the plan contract a sunset clause will give the builder a certain period of time in which to build the property, obtain the necessary council consents and register themselves as an owner of the property. If the property is not built before the sunset date, you as the purchaser can pull out of the contract and have your deposit returned.
When will settlement be?
Once the property has been built and registered in the name of the builder, the builder will then provide you with a period of time, usually 14 days in which to settle on the property, and if you will have a mortgage, have the bank settle on the purchase. This means that there is a lot to do in this 2-week time scale, and you need to have engaged a conveyancing solicitor who is on the ball. If you cannot settle in the 14 days, you will be exposed to many costly penalties.
Why you should never buy off the plan
At Mr Conveyancer we do not advise that you should never buy off the plan, but like any contract that you sign, you need to be aware of your rights and obligations. Usually the concerns that we find is that purchasers finance pre-approvals have ran out, and circumstances have changed since the time that the contract was entered into, and settlement, preventing them from obtaining finance and therefore meaning they lose their deposit.
Mr Conveyancer is here to offer a complete solution to meet your needs. We have a ‘can do’ attitude and understand that timely and professional attention to detail is required for the best property transaction outcome. We will help you save time and money. Click here to contact us today and explore our quality service and legal conveyancing solutions. Your property deserves the assistance, quality and skill that we offer.