Long Saad Woodbridge’s property law team specialises in representing both developers and purchasers considering buying off the plan, ranging from small-scale land subdivisions to large mixed-use developments across Australia.
Our extensive experience has underscored the critical points that buyers need to be aware of at the outset of their property search. Setting expectations early regarding what can be expected from a legal perspective is paramount, making a knowledgeable and specialised property lawyer an essential partner for a successful transaction.
Key Points when Buying Off The Plan Property
Before you embark on your journey to buying off the plan property, there are crucial aspects to consider:
Sunset Dates
Every contract should have a “sunset date“, which is the latest date by which the developer must register the plan, in order for settlement of the purchase to occur. Without this date, purchasers can get strung along for years on end without any certainty. A sunset date provides a timeframe for the purchaser to choose not to proceed with the purchase, and get back their deposit.
Variations
As the developer does not have control over what requirements and changes councils, surveyors and other stakeholders may require, plans may be subject to change. However, off the plan contracts should contain a condition that limits these changes so that they must be reasonably required, and also that the area/size of the property cannot be reduced by more than a fixed percentage from the initial plans. The national industry standard is 5%.
Settlement Timeframe
It is important that a lawyer negotiates a practical timeframe for settlement to occur, once the plan is registered. This ranges from 7 to 28 days, and we generally like to see 14 to 21 days, as this time is used for the bank to finalise a loan and finance, and for the necessary legal steps to take place.
GST and Capital Gains
Most contracts will require the purchaser to withhold a percentage of the purchase price on account of the developer’s Goods and Services Tax (GST) and Capital Gains Tax (CGT) liabilities, and pay this directly to the ATO. It is important that the purchaser’s lawyer is aware of these requirements to ensure compliance, noting that the onus is on the purchaser.
Understanding the Risks Involved
Buying a brand-new home off the plan does however come with some risks and considerations. It’s important to understand these risks, and be well-prepared to deal with them should they arise. Buying off the plan risks include both financial and time-delay risks.
We recommend that you read our article covering the topics of off the plan risks for better insight into the various risks involved in this type of transactional.
How a Property Lawyer Can Safeguard Your Off The Plan Purchase
Long Saad Woodbridge’s property law team is committed to:
- Thoroughly reviewing proposed contracts and negotiating for the best protection mechanisms for purchasers, as contracts often heavily favour developers.
- Ensuring compliance with GST, CGT, and all other state and federal government requirements at all times.
If you’re considering buying, developing, or selling off the plan properties, please reach out to our expert property law team. We’re here to guide you through every aspect of your transaction.
Important Disclaimer: The content of this article is general in nature and for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.
