Wednesday, 27 February 2008

Buying "Off The Plan"

Source: Consumer Affairs Victoria

Buying 'off-the-plan' means that you buy a project home, apartment, or in some cases, sub-divided vacant land, which is offered for sale before any building has begun or before it is finished. In other words, you make your purchase before the plan has been certified by the local council and registered at Land Victoria.

One problem faced when buying off-the-plan is that you are unable to inspect the actual property you are buying. Instead, you need to rely on an artist's impression of your home, a floor plan and on the builder's reputation to make sure you get what you are paying for.

One advantage is that the amount of stamp duty payable may be less than on an existing property or refurbished building.

When buying off-the-plan, you will sign a contract with the developer and pay a deposit, then pay the balance when the property is completed. A purchaser may end a contract if the plan of subdivision has not been registered 18 months from the date of the Contract of Sale. But some contracts may specify a longer time allowance for registration, so read the contract carefully.

It is also important to understand the rules and regulations relating to insurance. For instance, if your contract is with the developer and not the actual builder, the Domestic Building Contracts Act 1995 does not apply and therefore there is no protection in the form of builders warranty insurance.