Buying off the plan
Buying off the plan is when you buy a property before it is built based on the designs and plans provided for the development.
Real estate agents, property developers or builders regularly advertise projects for sale off the plan in the Northern Territory (NT).
Before you buy
Look at the plans
When buying off the plan, you will usually get to see architectural plans, sketches or models of your home.
You may also be able to visit a display home.
Pay a deposit
A deposit is normally paid when the contract has been signed and the balance becomes due when the property has been completed.
When your property is built
A minimum number of properties may need to be sold before building on your property will begin.
You should also get a predicted completion date from the developer and you should seek legal advice before signing any contracts.
There may be stamp duty benefits as stamp duty is calculated on the value of the property at the date of the contract, not the value on completion of construction.
Costs and resale
You may have the right to have input into the design and finishes of the property.
This could save you renovating or repainting if you bought an existing property.
Profit may be made from an increase in market price.
The on-sale of units off the plan are subject to stamp duty implications.
If the property is not built
While architectural plans, sketches, models or displays may be viewed, you can't view the finished product.
Completion dates may be uncertain and there may be delays in construction due to weather, contractors, material, goods supply and other factors.
Changes in the building process
The building plans may need to be changed during the construction process.
This can mean that the finished product may be different to the original plan.
The quality and standard of fixtures and fittings may be unknown and the final product may not meet expectations.
The developer may have authority to vary the finishes without your permission.
Changes in property market
The market may fluctuate and in the event of a market downturn, the original purchase price may not be returned on resale.
Uncertain details about a body corporate
You may not have all of the information about things like body corporate meetings and fees when the development is advertised for sale.
The developer may have agreed to long-term management contracts which may not be able to be changed by the body corporate.
Read more about buying a unit in a body corporate.
Signing a contract
When you sign the contract to buy an off the plan property, the contract will not have the completion date.
This will be included in the contract when the building is finished and the unit plan has been registered.
You will usually pay a deposit when you sign the contract.
You will then pay the balance of the purchase price on settlement.
Read the conditions of the contract carefully.
You should seek legal advice on the benefits or restrictions in the contract including any of the following:
- what changes be made to the finishes in the kitchen, bathroom and laundry
- if you can select the appliances and other items such as stove, dishwasher, floor and wall tiles
- if you can the site be visited during construction.
Read more about signing contracts.
What you are protected by
There are some protections for purchasers who buy off the plan.
Your deposit should be held in a trust account with a licensed real estate agent, licensed conveyancing agent or lawyer
When the settlement date is reached you can cancel the contract without paying a penalty.
You can use the 13-week defects clause in the contract to get the developer to fix any defects that have been identified during that time.
Under NT law, builders and developers must also have home warranty insurance for residential building works valued at more than $12,000, so you are covered for works that haven't been finished or do not meet industry standards.
Last updated: 23 March 2016