Buying an off the plan apartment

 

What is an ‘off-the-plan’ purchase?

Purchasing a property off the plan is exactly what it sounds like. You’re signing a contract and paying a deposit for an apartment that is not built and is still in the planning stage. Now, buying real estate that does not exist may sound crazy, but it is actually quite common when it comes to apartments and can result in big benefits, although there is also some risk involved, as you’re buying something that has not yet been built. In some cases, purchasers may sign up early based on the apartment plans and artistic renders, others will sign on after construction has already started. It is definitely a unique way to enter the property market, but the journey is often worth it once the unit is finished, the builder hands over the keys and you get to move into a brand-new home you designed. 

 

How long does it take to settle?

Settling a property after you have signed a contract and paid a deposit can take months and even years. The length of time will depend on what stage of the development you buy in at, as well as the type of development being built. The length of the construction period will be written into the contract of sale and a good developer will also include agreements to update you and other apartment owners as the project reaches key milestones. When the building process is nearing the end, you will be issued with an expected settlement date. Usually this is locked in several weeks before settlement, so you have plenty of time to get excited, get your finances in order and carry out all your pre-settlement inspections. 

 

What to look for in new developments

When it comes to purchasing in a new development it is important not to get sucked in by attractive pictures. Ultimately, this is not just your home, buying an apartment should also be a good investment. Generally speaking, choosing a complex with fewer apartments is a good idea. Smaller developments tend to be more boutique and individualised rather than mass produced, and the developer is more likely to pay greater attention to detail. Also, smaller developments usually have lower strata fees. 

 

Thoughtful design is another key factor. Apartments that are designed for quality of living will gain more value over time. This includes big windows, layouts that flow and good ventilation. 

 

Aspect is also crucial. In Australia, the most desired orientation for a building is to face north or north-east with plenty of windows and design elements that maximise the afternoon sun. Soundproofing is also increasingly important when it comes to your high-rise haven. There is nothing worse than hearing your neighbour’s footsteps, music or their conversations. So, savvy apartment buyers are increasingly looking for developments that prioritise soundproofing between apartments as well as quality windows and sealants to ensure peace and quiet.  

 

Visiting a display suite

There is something about walking into an apartment that could be yours – and a display suite makes the off-the-plan purchase experience so much more exciting. Display apartments are fully decorated furnished prototypes created to lure in potential buyers and show off what the developer has on offer. Buyers can walk through the apartment and get a feel for the space and layout, while also getting a taste for the types of surfaces and appliances they would like. Often a display unit can be an incredibly positive experience for buyers who struggle to imagine what their apartment will look like once built. But it is important to take the display with a grain of salt and remember that it is an example, not a guarantee of what you’re going to get. 

 

What to look for

Layout: If your developer has more than one display apartment, look at them all to compare different layouts. This is because it is difficult for the average buyer to visualise how a design plays out in real life. Seeing it in the flesh, before you choose will ensure you pick the perfect one for you and your family. 

Size: A display home will often represent the best options available, so don’t assume the spacious room you’re walking through is what is in your contract. Ask about the floor size and ceiling height the display has and compare these to your specifications. 

Finishings: when it comes to an apartment, the interior of your home is the number one priority, so a display apartment is the ideal way to experience finishings and materials. Most developers have standard packages based on style, for example, classic elegance? or modern contemporary, and may even allow you to play around with several different options within these. It is frustrating to buyers, but most standard packages will not include the finer or unique finishings, which come at an extra cost. So, if you’re going for the specialty light fixtures, floor covering, bench top or windows be prepared to pay more. 

Appliances: Quality ovens, stove tops and other appliances have become a major selling point for many developers. Some companies will include top-quality brands as a standard inclusion, others will not.? Check when at the display what your package offers and whether you need to upgrade. 

 

What not to look for

Colour scheme: Developers offer a range of colour schemes so you can personalise the space to your tastes. But usually display suite walls are kept fairly tame to appeal to a wide variety of purchasers. 

Amenities: The display home is not an indication of how common areas, pools, gyms and foyers will look. Ask plenty of questions about the areas not on display, including the finishings, size, natural light and general design to ensure you’re happy with what is being built before committing to a development. 

Aspect: Developers are putting their best foot forward in a display unit, so be careful to consider the orientation of the apartment you’re purchasing and whether it will receive the same amount of sunlight. 

Must haves vs nice to haves

Compromise is not a word we like to hear but it is necessary when figuring out what you need and just really want in your apartment. In the end, you’re trying to create your dream home, but you also want to ensure it is a good investment and will hold value over time. So here are some things to consider. 

 

Must haves

1. Storage: Space is in short supply in apartments so don’t short change yourself when it comes to storage. 

2. Sound proofing: Noise level will impact your quality of life especially if you can hear your neighbours or the party happening several floors down. Do not compromise on sound proofing.

3. Parking: If you have a car, you cannot overlook where you will keep it. Street parking is often not a reliable option so a car space may be non-negotiable for many people. Also, check if there is designated car parking on the title and whether there is adequate visitor car parks.

4. Security: It is a reality of apartment life that many people are entering and exiting the complex so for your safety, security is a necessity. This can include key passes to lifts and building entry points including the car park.

5. Quality appliances: Things like stoves and ovens are part of the design in a new apartment, but opting for the stock standard may not ensure quality and can also prove difficult to replace if you’re not happy with them. Make sure your appliances are reliable and suit your lifestyle needs before signing off the plan. 

6. Natural light: Light from the outside is crucial in apartments. However, in may Australian states, it is not regulated. Be wary of designs taht have minimal windows and rely on light ‘borrowed’ from other rooms. 

7. Rubbish: Checking waste disposal options is important. The last thing you want is to be trudging down the several flights of stairs to dispose of your rubbish. Buy you also don’t want a smelly rubbish chute located right next to your doorway.

 

Nice to haves

1. Fancy finishings: We all like nice things but if an expensive kitchen and grand floorboards are not achievable on your budget that’s alright.

2. Amenities: Access to a pool or gym is nice to have but is not crucial, especially if you cannot afford it.

3. Lots of balcony space: Apartment living is about coping with less space, so a big balcony is great in theory, but won’t be an option on most off-the-plan purchases. 

Customising your apartment

Personalising a new build can often take only a few changes but can transform a cookie-cutter design into your dream apartment. And when it comes to customisation the old saying applies “if you don’t ask, you don’t get”. Builders are increasingly open to meeting the individual desires of home buyers, whether these be cosmetic or structural. This includes changes to; light fixtures, island bench styles and placement, kitchen splashbacks, walk-in wardrobe, shelving configuration, built-in storage and layout. But customisation should not be a last–minute request with success more likely if changes can be incorporated into the plans before approval. 

 

Pros and cons of buying off the plan

Buying off the plan offers some great benefits, but it is important to remember it doesn’t come without risk. This is why an off-the-plan purchase should not be a decision made without plenty of research. 

Here are some of the pros and cons: 

 

Pros 

• Lower purchase price 
• You can offer a lower deposit? 
• Longer time to save your deposit? 
• Your property may have increased in value by the time it is built 
• It is brand new 
• Lower stamp duty 
• Tax benefits for investors? 
• The apartment is brand new 
• You can choose the finishes and appliances installed? 

Cons

• You’re locked into a contract without a dwelling? 
• Emotionally the process can be quite stressful? 
• The market may turn, and the value of the apartment may be less once finished than the agreed upon purchase price 
• There may be construction delays? 
• Developers can go bankrupt and investors can lose their deposit? 
• The apartment may be smaller than you anticipated? 
• Landscaping in common areas may not be well established when you move in 
• The work may not be up to the standard you expected  

What is a sunset clause?

The sunset clause is a section in an off-the-plan contract which has become quite controversial in recent years due to developers misusing it. In a nutshell, a sunset clause is essentially an expiration date on the contract. This means if the apartment is not finished and settlement has not occurred by a set date then both parties can walk away, and the developer will hand back the deposit. This can be hugely beneficial to buyers who may have found another established property that they would prefer. 

However, it is not uncommon for some companies to abuse this clause by delaying settlement on a development that has risen dramatically in value. Because the deadline has expired they simply hand back the deposit to a buyer then sell the finished apartment to another buyer for a higher price. To combat developers ripping off buyers both New South Wales and Victoria have attempted to introduce safeguards against this happening. However, in other jurisdictions this is not the case making it essential to check you developer’s track record before committing. 

 

Conveyancer

 Taking ownership of a property is a complex process and includes plenty of paperwork, so to make the settlement run smoothly and avoid weeks of work most people engage the services of a conveyancer. It is important to hire a conveyancer early on as they help you understand the contract of sale, lodge legal documents and research the property checking for easements and other information that may impact the property. 

A conveyancer will also ensure your deposit money is placed in a trust account, organise payment of rates and taxes and assist with the transfer of the property title. Some buyers choose to do all this themselves but beware it can take weeks to figure out the process and understand documents, so for a less stressful settlement it is worth paying a little extra to bring in an expert. 

 

How to find a Conveyancer?

It is important to find a conveyancer you can trust so it is recommended you interview a few candidates before you make a decision. You should ask them about fees to make sure they are suited to your budget. Ask whether it is a fixed cost or whether there may be additional charges. 

Also, find out how they intend to communicate with you. The settlement process can move fast, so you want a conveyancer who is willing to pick up the phone and explain things to you immediately, rather than someone that prefers emails and is hard to get through to. 

 

What to look for in a contract of sale?  

The contract of sale may be confusing for home buyers but even though you may have hired a conveyancer to help, but it is still important to have a basic understanding of the document. The contract sets out terms and conditions of the sale for both the buyer and the seller. It will clearly state the date of settlement, the names of the purchaser and the vendor, the process and the deposit and whether the property will be vacant or if it is subject to a lease. It should also include what is known as a chattels list, which specifies fixtures and fittings that come with the house. 

 

As a general rule anything fixed to the property should stay. This includes things like carpet, curtain rods, light fixtures, however, there may on occasions be items that the?seller wants to take or the vendor wants included in the sale, which should be written into the contract before it is signed.

 

Settlement conditions are another thing you should check before signing. As a buyer you may want to make an offer subject to finance or require the house pass a building or insect inspection. These need to be identified and agreed to by both parties. 

 

If not buying at auction both the purchaser and vendor have a cooling-off period, where they can essentially call off the sale. Typically, this has to occur within two to three business days depending on the state you’re buying in and it only applies to residential properties. However, you will be required to pay a cancellation fee so it is important to think long and hard before committing to a sale. Some contracts will also include a waiver of the cooling off period so it is important to read the fine print before signing anything. 

 

New apartment trends

The apartment market is always evolving to match the changing needs of home buyers. So here are some apartment trends we are seeing right now. 

 

Green apartments

Sustainability is the new buzz word in most industries and this is especially so when it comes to new real estate developments. Green buildings not only give buyers peace of mind that they are helping the earth but can also make sense financially and create a nicer living environment. Utilising natural light, increasing natural air flow and incorporating real plants throughout the building are major draw cards for potential owners and are just some of the features. Additionally, some developers are offering renewable energy through a solar micro-grid, carbon-friendly construction materials and innovative water systems. Often residents can also share electric car charging bays in the basement. 

 

Smart apartments

Plenty of buyers these days want modern but high tech is also proving to be a big lure. Some developers?specifically target the tech-savvy buyer offering home automation systems that will allow residents to control their homes remotely especially when it comes to heating, air conditioning, lights, blinds, electronics, security as well as the sound systems.  

Family apartments

The great Australian dream of owning a house is increasingly being shunned as families embrace apartments close to the CBD and located near attractive green spaces. As a result, there is more demand for larger-sized apartments specially designed for people who are willing to reinvent the family home. Living with kids in apartments is not just possible, in fact some families really love it as there is less maintenance and chores to do around the house, and in the backyard. Apartments are also generally more affordable freeing up money for holidays and weekend adventures. However, be conscious of the need for more space, which can be tricky in apartments. Developers do offer family-friendly floor plans that usually come with more space, more bedrooms, additional storage, bigger bathrooms and the potential for internal sliding doors to help reduce noise and give parents some peace and quiet. 

 

Community developments

Community-centric apartment complexes are the next big thing, aimed at high-rise dwellers looking to interact with their neighbours rather than pretend they don’t exist. While still an emerging trend, there are developers in most of Australia’s major cities pioneering community-orientated developments. This usually incorporates things like communal gardens, bike parking in place of private car parking, communal laundries and a fossil-fuel-free energy network. In some cases, buyers are also encouraged to participate in the design process, meeting regularly with other owners to discuss and vote on ideas, helping create a community before residents even move in. 

 

 

New apartment perks

Buying brand new offers plenty of perks not only in terms of cutting-edge facilities but also can make a big difference on your hip pocket. Here is a list of things you can look forward to when buying a new apartment. 

 

It is new – there is nothing like that feeling knowing you’re the first to move in and experience a property. 

First in first served – if you buy brand new and sign on to a development early you have the pick of the bunch including where the apartment is located and on what floor.

Big savings – typically the earlier you sign on to a development the cheaper the price which can mean you save a lot off the final price tag. You can also access first home buyer grants and benefits

Low maintenance – everything has been newly installed so the chance of having to pick up a hammer or call in a plumber anytime soon is unlikely.

Hotel facilities – think foyers, lifts, cutting-edge design.Buying new means you can get the latest luxury. 

Better security – usually including security activated entranceways and elevators

Higher rent -as a general rule tenants are willing to pay for newer complexes and apartments. 

Peace of mind – new buildings come with a building warranty meaning if something goes wrong in the first six years you’re covered. 

It is yours – buying new means you most likely had the option to customise the apartment specifically to your tastes. 

 

This article was sourced from realestate.com.au.