Buying a home off the plans can be an exciting way to secure a brand-new property, often with modern features, lower maintenance costs and flexible payment options. But purchasing a home before it’s built also comes with its own set of risks and considerations — from construction delays to finance approvals and contract conditions. Here, industry experts answer the most common questions buyers have before signing on the dotted line.
1. What happens if there are construction delays?
Delays can occur due to factors such as weather, supply chain disruptions, or consent-related issues, says Marc Hunter, managing director of Latitude Homes. A well-managed build programme and proactive communication are key.
“At Latitude Homes, we keep clients informed throughout the build and work to minimise delays wherever possible. Contracts typically outline how delays are managed and what provisions are in place, giving clients clarity from the outset.”
2. Any risk specific to ‘off the plan’ homes?
Buying a home, whether it’s new or pre-owned, is nerve-wracking. After all, it’s the biggest thing you’ll likely ever buy. Marc says choosing a developer and/or builder with a good reputation is paramount and make sure your Sale and Purchase Agreement is transparent.
There’s also the matter of pre-approval at purchase time potentially expiring before construction is done and the settlement time.
“You need to keep incrementally renewing your pre-approval, or at the time of purchase, obtain an agreement in principle that you could achieve your finance, therefore keeping your financial situation the same (or better) until handover time when you apply for finance,” says Lisa Redgrove, head of sales, Ockham Residential.
“There is also the market movement factor – you agree on a price today, but settlement may be one to three years away. If the market drops, your property may be valued less than what you agreed to pay. On the flip side of this, it could just as well have gone up in value (but you pay your initial agreed price).
3. Can I sell my property before it’s completed?
It’ll depend on your individual Sale and Purchase Agreement. In the case of Ockham, Lisa says it’s a condition in their agreement that this can’t happen prior to settlement. Technically, this is called an ‘on sale’ or ‘assignment’ says Marc and is something that can be done subject to the terms of your contract and stage of construction. Read the fine print.
4. Are new-builds eligible for lower deposit requirements with banks, and what is a turnkey versus progress payment structure?
Most major lenders are able to approve low deposit loans below 20 percent for new-builds without breaching their loan to value restrictions, compared to what’s required for an existing home. Typically, a ‘turnkey contract’ requires a fixed price with a deposit up-front and the balance paid on completion says Marc. A ‘progress payment contract’ means payments are made in stages as construction progresses, which can help manage cash flow, but “requires closer involvement from the client and lender throughout”, says Marc.
5. What appliances are typically included?
It depends on what your developer and/or builder has specified, but most come with some, so you can get that lovely all-new look and feel. With Ockham, each apartment (that’s what they specialise in) comes with an oven, induction cooktop, dishwasher, rangehood, heat pump and a washer/dryer combo, some also include fridge and microwave. Latitude’s generally includes kitchen appliances, bathroom fittings, flooring and key fixtures, with the flexibility for clients to tailor selections to suit their lifestyle and budget.
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