Buying Off the Plan
Buying off the plan means purchasing a property before the Developer builds or subdivides it. This includes land, apartments and townhouses. Rather than inspecting a finished property, you rely on the Developer’s building plans and specifications. The Developer discloses these in the Section 32 Vendor Disclosure Statement.
Advantages and Disadvantages of Buying Off the Plan
| Advantages | Disadvantages |
|---|---|
| Stamp Duty Savings You may pay less Stamp Duty through an off-the-plan Duty Concession. This concession reduces the duty compared to buying an established property. The State Revenue Office explains the concession here: https://www.sro.vic.gov.au/landtransfer-duty/offtheplan | Limited Inspection Opportunities You cannot inspect the property as freely during development. Quality or defect issues may arise. The Builder may find these issues difficult to fix later. |
| Design Flexibility & Price Certainty You can give greater input into the property’s design. You also lock in a fixed contract price. This price stands firm, even if market values shift during construction. | Construction Delays Most off-the-plan purchases run past the estimated completion date. Some take years to finish. These delays cause inconvenience. Before the sunset date, the purchaser has few options to exit the Contract. |
| Extended Settlement Timeframes Settlement usually takes longer than most other property purchases. This extra time lets you save money and organise your finances. | Developer Amendments Off-the-plan contracts let Developers amend the plan when needed for compliance or occupation. Amendments may add easements, relocate services or adjust floor layouts. |
| Sunset Clause Protection Most off-the-plan Contracts include a ‘sunset clause’. This clause lets the Purchaser rescind the Contract of Sale under certain conditions. The conditions apply if the Developer misses the sunset date. By that date, the Developer must obtain the Plan of Subdivision or Certificate of Occupancy. When the Purchaser exercises these rights, the Contract ends. The Developer then refunds the full Deposit. | Market Risk at Settlement Settlement may fall during an unstable market. The property may then value lower than expected. This can limit how much you borrow from the bank. You may need to cover the shortfall yourself. |
Advantages
Stamp Duty Savings
You may pay less Stamp Duty through an off-the-plan Duty Concession. This concession reduces the duty compared to buying an established property. The State Revenue Office explains the concession here: https://www.sro.vic.gov.au/landtransfer-duty/offtheplan
Design Flexibility & Price Certainty
You can give greater input into the property’s design. You also lock in a fixed contract price. This price stands firm, even if market values shift during construction.
Extended Settlement Timeframes
Settlement usually takes longer than most other property purchases. This extra time lets you save money and organise your finances.
Sunset Clause Protection
Most off-the-plan Contracts include a ‘sunset clause’. This clause lets the Purchaser rescind the Contract of Sale under certain conditions. The conditions apply if the Developer misses the sunset date. By that date, the Developer must obtain the Plan of Subdivision or Certificate of Occupancy. When the Purchaser exercises these rights, the Contract ends. The Developer then refunds the full Deposit.
Disadvantages of Buying Off the Plan
Limited Inspection Opportunities
You cannot inspect the property as freely during development. Quality or defect issues may arise. The Builder may find these issues difficult to fix later.
Construction Delays
Most off-the-plan purchases run past the estimated completion date. Some take years to finish. These delays cause inconvenience. Before the sunset date, the purchaser has few options to exit the Contract.
Developer Amendments
Off-the-plan contracts let Developers amend the plan when needed for compliance or occupation. Amendments may add easements, relocate services or adjust floor layouts.
Market Risk at Settlement
Settlement may fall during an unstable market. The property may then value lower than expected. This can limit how much you borrow from the bank. You may need to cover the shortfall yourself.
Helpful Tips When Purchasing Off the Plan
- Engage an experienced property lawyer before signing. They explain your rights and obligations under the Contract of Sale.
- Speak with your banker or broker about your financial position. Factor in future changes and the property’s future valuation.
- Keep in regular contact with the developer. Ask the developer to notify you of any changes so you can seek advice early.
How Haven Legal Can Help
At Haven Legal, our property lawyers advise purchasers buying property off the plan. We also work closely with property developers. This gives us a unique insight into both sides of the transaction. We use this dual perspective to deliver strategic advice that suits purchasers’ needs.
Watch our video for further insights into off-the-plan properties:
A Grand Plan: Buying Off The Plan —
Frequently Asked Questions
What does buying off the plan mean?
Buying off the plan means purchasing a property before the Developer builds or subdivides it. The property can be land, an apartment or a townhouse. You rely on the Developer’s building plans and specifications, which appear in the Section 32 Vendor Disclosure Statement, rather than inspecting a finished build.
What is a Section 32 statement?
A Section 32 Vendor Disclosure Statement is a legal document the Developer must provide before you sign an off-the-plan contract. It discloses the building plans, specifications and key property details so you understand what you are purchasing.
What is a sunset clause in an off-the-plan contract?
A sunset clause lets the Purchaser rescind the Contract of Sale if the Developer misses the sunset date. By that date, the Developer must obtain the Plan of Subdivision or Certificate of Occupancy. If the Purchaser exercises this right, the Contract ends and the Developer refunds the full Deposit.
Do you pay less stamp duty when buying off the plan in Victoria?
Yes. Victorian buyers may pay less Stamp Duty through the off-the-plan Duty Concession. This concession reduces the duty payable compared to buying an established property. Eligibility details are published by the State Revenue Office at sro.vic.gov.au/landtransfer-duty/offtheplan.
Can a developer change the plans after I sign?
Yes. Off-the-plan contracts let Developers amend the plan when needed for compliance or occupation. Amendments may add easements, relocate services or adjust floor layouts. A property lawyer can review the amendment clauses before you sign so you understand what the Developer can change.
What happens if construction is delayed?
Most off-the-plan purchases run past the estimated completion date, and some take years to finish. Before the sunset date, the Purchaser has few options to exit the Contract. If the Developer misses the sunset date, the sunset clause may let the Purchaser rescind and recover the Deposit.
How long does settlement take for an off-the-plan property?
Settlement for an off-the-plan property usually takes longer than most other property purchases. The extended timeframe gives buyers more time to save money and organise their finances before the property is complete.
Can I inspect an off-the-plan property before settlement?
No, not in the same way as an established property. You cannot freely inspect the property during development. Quality or defect issues may arise, and the Builder may find them difficult to fix later. Reviewing the Developer’s plans and specifications carefully before signing is essential.
What happens if the property is valued lower at settlement?
If settlement falls during an unstable market, the property may value lower than expected. This can limit how much you borrow from the bank, and you may need to cover the shortfall yourself. Speaking with your banker or broker early helps you plan for this risk.
Should I use a lawyer before signing an off-the-plan contract?
Yes. Engaging an experienced property lawyer before signing is strongly recommended. A property lawyer reviews the Contract of Sale and Section 32, explains your rights and obligations, and flags risks such as developer amendments, sunset clauses and settlement conditions.
