What is buying off the plan?
Buying 'off the plan' means you buy a house or apartment before the building works have been completed. In some cases construction may not have started.
This means that there may be some time between when you sign the contract and become the owner. During this time, the volatility of the market can mean the value of your property at settlement is different to the contract price.
When buying off the plan, you:
- cannot inspect the actual property. You have to rely on an artist's impression, a floor plan and advertising material to understand what you are paying for
- should be clear about the completion date
- are entering complex contracts. You should get legal advice before signing.
There are land transfer duty (formerly know as stamp duty) concessions when you buy property off the plan.
The amount payable depends on construction of the building and its value: the closer to completion, the higher the duty. You can get more information about duty from the State Revenue Office of Victoria website.
Buying off the plan property without being able to see the finished product does have risks, including:
- differences in the expected and actual quality of the final finishes
- unexpected changes to the plans.
If you buy off the plan and the plan of subdivision is not registered, the law protects you by requiring the deposit is:
- no more than 10 per cent of the contract price
- held in trust by an estate agent, legal practitioner or conveyancer, or jointly by the buyer and seller.
If the plan of subdivision is not registered by the time specified in the contract or the default time of 18 months, you have the right to end the contract.
If you find defects in a building you bought off the plan, you can:
- bring these defects to the developer’s attention and seek to resolve the issue
- approach the builder, as the defects are covered by implied warranties in the Domestic Building Contracts Act 1995. For more information about implied warranties from the builder, view our Building warranties, insurance and insolvency page
- claim on domestic building insurance if the builder has died, is insolvent or has disappeared. Whether you are covered by this insurance will depend on your contract.
Last updated: 17/05/2012