How to avoid buying off-the-plan pitfalls

With the Federal Election now behind us, key figures in the property industry have signalled confidence will return to the property market, which means an increase in off-the-plan home sales.

Off-the-plan home and apartment transactions are increasingly commonplace and can carry a number of advantages for buyers — including delayed full payment — but they also carry notable risks that should be protected in a sales contract.

Online conveyancing firm Conveyancing.com says buyers and sellers of off-the-plan property should be wary of the risks and take steps to ensure they are protected from the drawbacks of these types of property deals.

Conveyancing.com delivers conveyancing services by property law experts, backed by lawyers, and highly recommends buyers and sellers protect themselves against the risks off-the-plan property poses.

Managing Director and Accredited Business Law Specialist Jim Parke says conveyancers are committed to serving the best interests of a party and those at Conveyancing.com are backed by degree-based property law expertise which protects against these risks.

“Homes bought off-the-plan can be a great option for buyers wanting to move into a new home in a few years’ time,” Mr Parke says.

“Buyers can add to their deposits before settlement and enjoy the benefits of a delayed start to any mortgage and the interest it attracts. But property values can fall in between when buyers sign up and are expected to settle their deal. Finance approvals can unfortunately disappear, especially if their bank applies a different lending criteria.”

If you’re planning to buy off-the-plan, some of the risks you might face are:

• Delays to construction;
• Changes to the plan, home features or development approval;
• Bankruptcy or administration of the developer or a change of developer; and
• Falling values that might void a finance approval.

“A property law expert can flag potential issues with a client up front so the buyer or seller is not left surprised when risks become realities at the proposed time of settlement,” Mr Parke says.

If you’re a developer, other issues might be:

• Voided contracts or buyers struggling to meet a shortfall their bank won’t cover;
• Expiration or cancellation of key government approvals for the development; and
• Falling values that curtail what prices lenders or buyers are willing to support.

Conveyancing.com understands the risks associated with off-the-plan transactions for buyers and strives to make the risk management process simple and clear-cut for clients committing to these type of property deals.

This is backed by expertise in property law which helps buyers avoid the risks of off-the-plan transactions.

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