Buying off-the-plan is one way to enter an up-and-coming suburb, but it can be daunting if you haven’t done it before. An off-the-plan sales expert shares his advice.
For those who have never bought off-the-plan, buying property that has not been built can be a great risk.
Leonard Teplin, director of Marshall White, says with some prior knowledge, buying off-the-plan can be worthwhile, as long as potential owners ask six questions.
1. What happens to my 10 per cent deposit?
“The 10 per cent deposit – by way of either cash or bank guarantee, if allowable – will be retained by the vendor’s legal representative in their trust account until the project is completed or, alternatively, the sunset period expires,” Mr Teplin said.
The sunset period is the date when a development must be completed, as outlined in the contract. If the builders are not finished by that date, the contract becomes void, which allows buyers to receive a refund with their interest.
2. What happens if my circumstances change and I need to sell my purchase prior to settlement?
Mr Teplin said potential owners need to seek legal advice about their obligations to the developer.
“You have the right to assign your contract of sale under the nominee provision. However, rarely will a developer allow you to promote your purchase, particularly if the developer still has unsold stock prior to or even after a settlement period,” he said.
3. What are owners corporation fees and what do they cover?
Owners corporation fees cover various costs of a building, such as general administration and insurance.
“Your selling agent or developer should provide you with an estimate of your quarterly contribution to the fees levied by the owners corporation manager,” Mr Teplin said.
“Within the contract of sale there should also be a budget estimate which sets out both your and other purchaser’s quarterly contribution.”
4. Who are the people behind the development?
While buyers ask who the developer is, it is just as important to find out everyone who is responsible for the building, such as the architect, the project manager and if a builder has been appointed yet.
“You should visit each alliance partner’s website in order to establish their credentials and gain an understanding of the calibre of projects they have delivered in the past,” Mr Teplin said.
5. How do I know what I see in the marketing material will be what is actually delivered?
In order to avoid asking this question, Mr Teplin recommended going with trusted developers who have a proven track record of building accurate complexes.
However, professional advice should be sought to determine what the owner’s rights and obligations are, which can include the rights to substitution if the contracted elements of the property, such as taps or light fittings, are unavailable.
6. If I am an investor, what is the best time to lock in a managing agent?
A good time to appoint a managing agent is three months before the estimated completed date and should be a part of the same company that you bought the apartment from, as long as they have a relationship with the developer and project manager.
“This often gives you the ‘inside running’ prior to any proposed settlement. Speak to your property manager for more details,” Mr Teplin said.