What Is An Off The Plan Property? (Part Two)
We had a great response to our first article, answering some of your questions about purchasing properties ‘off the plan’. We’ve compiled a list of the most commonly asked questions and provided answers for you below!
HOW MUCH DEPOSIT DO I HAVE TO PAY?
- 10% of the purchase price is the maximum amount you can deposit for an ‘off the plan’ property.
- There is nothing stopping you from negotiating a smaller amount with the vendor.
Remember that many builders/developers will accept a deposit of less than the standard 10% to get a property sold. The most important that lenders are looking for isn’t the amount of the deposit held in trust but the surety of the sale, so if you only have a smaller deposit or want access to the money during the settlement period you can always ask for a reduced deposit.
HOW DO I KNOW WHAT I AM PURCHASING?
- Have a look at display suites, marketing information and previous developments that the builder has produced. If they are good quality the builder will be happy to show you!
Whilst larger scale developments will have display suites that you can view the property, it is only when you are given a chance to attend an inspection before settlement that you will see the actual property. Of course if you purchase off a smaller developer then you can just drive past the property or the real estate might be happy to take you for progress tours. As a general rule with bigger developers, you won’t be getting in until close to settlement.
WHAT HAPPENS IF I DON’T LIKE THE FINISHED PRODUCT? DO I HAVE TO SETTLE?
- You can fix any problems with the property during the defect period.
- It is important to understand what you are and aren’t purchasing when you sign the contract of sale.
Unfortunately unless the builder/developer agrees to let you out of the contract and return your deposit (unlikely unless they think they can re-sell it for a higher price), once you have signed a contract you are legally bound by it. New purchasers are given a chance to conduct a pre-settlement inspection where they can tour the property and check for defects which are fixed before settlement. But if you simply ‘don’t like it’ then you can’t just easily get your deposit back and walk away.
THERE IS A LIFT IN MY APARTMENT BUILDING. WHO PAYS WHEN IT BREAKS DOWN?
- Check the age of the building, ensure that the OC has the correct insurance and ask how many times the lift has broken down in the past year.
This question could just as easily apply to car stackers which are popping up in more and more developments, particularly in the inner city area. Lifts and car stackers are used frequently and things that are used alot tend to break down. When that happens, someone has to reach into their pockets to pay for their maintenance and repair…and that’s you. As a member of the Owners Corporation of the building (see our article on Owners Corporations here) you will have a certain amount of your Owners Corporation fees cover maintenance annually. However if there are major repairs then you may be required to pay a special levy.
Our advice is to check the age of the building (old developments have older lifts that break down more often) and ensure that the Owners Corporation has the correct insurance. You could even enquire as to whether there have been any additional fees paid recently to get an idea as to the quality of common services in the development.
If you’ve jumped into Part Two of our purchasing ‘off the plan’ articles then jump back to Part One for some more information to make you a confident and informed purchaser. Click here