No matter where you are in the world, the option to purchase pre-owned or second-hand property is a common practice.
In Australia, many homeowners have subscribed to off-the-plan and many first-time homebuyers are also seriously considering the option for a variety of reasons.
Off-the-plan property
So, what exactly is off the plan property?
Simply put, off the plan refers to purchasing a property prior to it being built. Buyers agree and sign a contract closing the sale based on the property developer’s designs, plans and visual renderings of the property.
Upon signing the contract, buyers shell out no less than 10 per cent as deposit and the remaining balance to be settled once construction is completed and the buyer takes out the property.
Development of the property usually last for a period of a few months to a couple of years, depending on the nature of construction and development phases – single-detached units are completed faster than large-scale apartment buildings.
The most common off the plan developments or projects involve apartments, townhouses, and house and land.
What home buyers need to know
First time home buyers are usually benefitting from grants and stamp duty discounts as a stimulus to encourage more people to purchase homes, especially off the plan property.
Here are some of the common reasons why people have opted to go for off the plan property purchases.
Availability and more options
This depends on the level or phase of development, buyers are more entitled to more options in terms of location, finishes, and design variations.
With single-detached units, the sooner you avail once the offerings are made you have better chances of getting property in the best spots for you. With apartments, you get more options in terms of aspect, floor plan or level that are available.
Depreciation
Generally, off the plan developments provide greater tax depreciation benefits compared to purchasing established property especially in terms of wear and tear.
With off the plan, a larger portion of property expenses and bills are calculated against tax returns and help improve overall cash flow.
Attractive pricing
During the early phase of the sale process, developers for off the plan projects are often motivated to start selling so they could generate the capital to start building, especially since marketing efforts rely on a specific quota before they could start the project.
To encourage buyers, special offers or discounts are generally offered to entice people to purchase. Prices, however, start to go up when the project has already started and the market begins to see the projects taking shape and making it more of an attractive sell to new buyers.
More time for savings
Since only a deposit has been made to commence the purchase process, buyers have more time to save money since they are not required to pay the entire amount or cost upfront.
As off the plan development generally take several months or even years before it gets completed, buyers have time to set aside savings to pay for the total cost and the property is turned over to the buyer.
Bigger rental yields
For those looking into property investment for their off the plan purchase, it gives them more opportunities to get more tenants since the property is new and are usually situated in strategic locations, making it a viable choice for those looking to rent a home.
Studies have shown that renters prefer newer homes to established or older properties.
So, the next time you have a client looking to purchase a home, you may consider offering off the plan as an option for them especially when it suits their needs and financial status.