Downsizers looking at purchasing off-the-plan apartments have been given a boost by new consumer protection regulations and stamp duty cuts, along with the improved market for selling the family home.
On 1 December, major law changes relating to off-the-plan purchases came into place in NSW.
As part of these changes, off-the-plan buyers need to be provided with key information about the development, including copies of the proposed plan, proposed by-laws and a schedule of finishes, before contracts are signed.
In addition, the new law:
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Requires vendors to notify purchasers of material changes to their purchase and allow buyers to end the contract or claim compensation in some cases if they are materially impacted by changes made from what was disclosed
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Makes vendors provide a copy of the final plan at least 21 days before the buyer can be compelled to settle
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Widens existing legislation to clarify that the Supreme Court can award damages where the vendor terminates under a sunset clause; and
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Extends the cooling off period to 10 business days with any deposit to be held in a controlled account until settlement.
The Property Council of Australia said the changes “are considered best practice and most Property Council members already would provide buyers with these protections”.
Stamp duty concessions
Meanwhile, the Western Australian Government in October introduced 75 per cent stamp duty cuts, valued up to $50,000, for off-the-plan purchases of new residential apartments.
The changes are an attempt to breathe life back into the Perth housing construction market, which has been the hardest hit of any capital city in Australia. The latest price analysis shows that Perth dwelling prices have crashed by 21.3 per cent since the city’s market peak in mid-2014, and down 7.7 per cent over the last 12 months.
The WA concession is arguably the most generous in Australia. Other States which offer off-the-plan stamp durty incentives include:
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Victoria, which reduces stamp duty costs for off-the-plan purchases, if you intend to use the home as your main residence and the home has a value of $550,000 or less.
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NSW, which allows you to defer your stamp duty payment for up to 12 months if you buy a home off-the-plan, which you intend to use as your main residence
Improved housing market
The off-the-plan market has also received a boost through recent strong nationwide real estate price results.
Corelogic’s national home value index recorded a 1.7 per cent rise for the month of November, which is the largest monthly rise since 2003. Sydney and Melbourne led the price rise charge, with values up by 2.7 and 2.2 per cent respectively.
The price rises will give greater confidence to downsizers that they will be able to sell the family home, while waiting for their off-the-plan apartment to be constructed.
Brisbane project records strong off-the-plan sales
In Brisbane, retirees have already purchased 80 per cent of the ten three-bedroom apartments in the latest stage of Aura’s Kingsford Terrace retirement community at Corinda, even though construction is not due to start until February 2020.
The company held a ground-turning ceremony at the site on Wednesday, 4 December.
See all available Aura properties, including the Corinda project, here
Tim Russell, Director of Aura Holdings, said: “More retirees are comfortable to buy off-the-plan because it allows them up to 12 months to prepare for their move, downsize and not rush the sale of their current home. Buying off the plan takes away a lot of stress because they have more time to organise the move.”
“We are a young company with six projects in various stages of development but our reputation for a quality product and our ongoing support of residents has created a lot of confidence for retirees to commit to purchase before construction.”
Work began last month on Aura’s separate Gold Coast development, The Pavilion at North Kirra, where 75 per cent of apartments have already sold.
General advice on off-the-plan buying
Buying off-the-plan presents a number of advantages and matters for consideration.
The advantages include:
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It generally leaves plenty of time to sell the family home, while your apartment is being constructed
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Given you are an early buyer, and a developer is keen to lock in project funding, there is a good chance you will be able to negotiate a healthy price discount
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As part of the purchase negotiation, you may be able to demand your own preferred internal apartment styling (an option which will not be available once the apartment is constructed and complete).
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You may see the value of your apartment rise with the market
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You may be able to access stamp duty discounts specifically for off-the-plan purchases.
Matters for consideration include:
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You won’t be able to actually inspect the property in person before putting down a deposit - so high-quality imagery and plans will be helpful for you to make a decision
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Your financial circumstances may change between when you put your deposit down and when you need to settle, which presents the risk that you may need to forfeit your deposit
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You are in the hands of the developer to deliver the project on-time and to a high quality - to this extent it may be helpful to check the developer’s track record in delivering projects
Please note this story has been prepared as a general guide only, and should not be relied upon as a substitute for seeking your own independent legal and financial advice.
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