To buy a property off the plan is to invest in a property that has been advertised to be built but hasn’t yet been built. The most common types of property offered to be bought off the plan are apartments and units where a buyer signs a contract despite not having the opportunity to examine a finished product.

Although this may sound like a peculiar concept when purchasing a property, there are several financial and personal advantages for doing so.

And while it can be exciting to think that you will be the first person living in the property with an opportunity to select your desired floor plan, there are several important considerations that need to be weighed to avoid any financial or legal complications.

With all the uncertain measures associated with buying off the plan, should you do it?

Here’s some advice examining both the pros and cons of buying off the plan.

Pros of Buying Off the Plan

1. An increase in value - This is probably the highlight of buying a property off the plan due to the chance of locking down on a price based on the current market. What this means is you get to pay today’s price for a property of tomorrow.
2. 
   Buying off the plan attracts many investors looking to ascertain high-value assets. And with the additional benefit of potentially lower deposits and the requirement of only a down payment with the final payment being made only upon completion of construction, the whole package is ideal for investments.
   
   Further, the probability of market increase is high as the area undergoes growth during the construction phase which means that you have secured a property at a bargain price and upon completion, the value will be higher than the purchase price.

1. Tax advantages - In Victoria, investors who purchase property off the plan may be eligible for concessions on stamp duty. Investors may also be able to claim depreciation to lower their tax requirements for items relating to the property such as fittings and fixtures.
   
   To find out if you are eligible to take full advantage of these tax benefits, consult a tax accountant for their expert opinion.

1. Brand new and customisable - When buying off the plan, the entire property is brand new. From being given the power of choosing colours, finishing touches, layouts, along with many other recommendations made to the developer, it can be extremely exciting to turn the property into something you like.
2. 
   Due to the property being new, it attracts a higher sense of lifestyle with the likelihood of open plan concepts reflecting modern tastes and preferences. These advantages in design often add higher value to your property and result in a longer durability to staying current and in fashion.

Cons of Buying Off the Plan

1. Risks with developers - There is no sure way to find out if the developer working on the property is reliable and the next best thing you can do is to only buy off the plan from a developer with a strong track record of success.
   
   Should the developer go bankrupt before completion of the construction, you may face dire loss with limitations on how much money you will get back as well as limitations on guarantees offered for failure to deliver.

1. Changes in the market - You never know what the market is going to look like when the property is completed. After all, nobody can predict the future of the market, and any downfalls to it could result in you overpaying on your new investment.
   
   Similarly, interest rates could fluctuate against your favour making the overall viability of your property investment not look as good as when you initially entered.

1. Legal matters - You will need to have a strong legal team on your side familiar with properties purchased off the plan so as to ensure that you are protected during your property buying journey.
   
   Factors such as the listing of the projected completion date, identification of buyer penalties in the event the contract is withdrawn, review of clauses which allow site visits, and so on, are all legal considerations that need to be made.

It is, therefore, crucial to protect your rights when considering to buy off the plan due to the risks associated with it. The best way to ensure your investment is protected is to engage an experienced conveyancer to help you realise your situation and to cover all potential issues that may arise.

Article provided by Conveyancing.com