The Advantages of Buying Off the Plan vs Already Built

Buying an apartment can involve buying one that is complete and brand new or already lived in, or one that has not yet been built or is under construction, which is called an off-the-plan purchase and is common practice in apartment buying. 

What is off-the-plan?

Essentially the property is not yet built, or is in the process of being built but is not yet complete. From purchasing off “artist impressions” (computer generated images) to nearing completion you can purchase off-the-plan and there are plenty of benefits to purchasing at this stage. 

Why buy off-the-plan? 

Buying into a brand new building can be safer as you are guaranteed no wear and tear and no-one has previously lived in or owned your property. For investors, purchasing or investing outside of your local market and having the flexibility to purchase in another state without having to ‘inspect’ the property is not only time saving, but you can purchase knowing what to expect without physically being there. New properties offer the greatest amount of depreciation savings in year one, allowing you to reduce your taxable income. You can claim on the building depreciation as well as the internal fittings and fixtures, and over the life of your investment. This can give you a significant tax deduction.

When purchasing off-the-plan there is the added bonus of only needing to provide a small deposit, with the balance of payment due when the building is complete, rather than requiring a mortgage straight away to purchase your apartment. 

Many developers have built apartments before. For peace of mind, you can request details on past projects and potentially look through one of their previous developments. 

Benefits of buying off-the-plan?

1.    If you get in early or in the ‘coming soon’ phase you are rewarded with the largest choice of floor plans, bedroom configurations and level of the building for optimal views, and often the lowest prices.

2.    You have the ability to customise your apartment. Typically there are a range of colour schemes to choose from and upgrade packages available.

3. Special requests may be taken into account with regards to accessibility, design, functionality and potential fittings and fixtures.

4. Your apartment is brand new, clean and modern

5. New buildings will have better technology systems and features than established apartment projects.

6. You have the peace of mind of warranties being included for all fittings, appliances and workmanship.

7. Maintenance and repair costs should be minimal given the age of the building – being brand new has its perks.

8.    Between sign up and settlement you only have to pay a deposit. The balance is not payable until the build is complete so you can lock in ‘yesterday’s pricing’ and not pay until ‘tomorrow.’

9.    Your deposit is placed in an interest bearing trust account and is credited to you at settlement.

10. For investors there is higher depreciation in the early years that will benefit your property portfolio value.

11. If you are looking at renting out your apartment there is greater appeal for new, modern buildings.

WHAT TO CONSIDER WHEN PURCHASING YOUR APARTMENT

Your most significant cost is the purchase itself, however there are a number of costs outside of the purchase price that you will need to consider. Note that as the purchaser of an “off the plan” or newly built apartment from a developer you won’t need to pay a fee or commission to the listing/sales agent, unless you have appointed a Buyer’s Agent. You should take into account the following additional costs when purchasing an apartment. 

Stamp duty

First home owners grant

Legal fees

Settlement adjustments 

Body corporate expenses 

Ongoing expenses 
 

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