New apartment complexes are popping up all over Perth, which has led to more West Australians opting to purchase an apartment off-the-plan before or during construction.
Off-the-plan refers to property purchases that take place before the property is completed and/or the certificate of title has been issued.
A deposit is paid by the buyer and settlement occurs when the apartment complex is completed, which could be several months or years later.
If you’re considering making an off-the-plan purchase, it’s very important you’re aware of the commitment and that you read the contract to know exactly what you’re buying and what your rights and responsibilities are.
How does buying off-the-plan differ to a regular property purchase?
It’s quite a different process to buying an existing house and the contracts are often lengthy, complex legal documents.
If the property is an apartment, then you’ll be buying a strata titled lot and the developer has probably drafted a set of strata by-laws, so make sure you read and understand these.
Before making an offer, check to see if it can be subject to finance approval. This may not be possible because a lender can’t make a lending offer that lasts for an extended period, but it can’t hurt to ask.
If you fail to meet settlement, the sellers may have the right to cancel your contract and re-list the property for sale.
If the apartment resells for less than what was agreed in your contract, then you may be exposed to the possibility of being sued for any shortfall.
Bear in mind that if the development has not yet started construction, there is no guarantee of it starting. The developer will often need to achieve a significant number of pre-sales to proceed.
Therefore, it’s wise to inquire about any clauses in the contract that permit the seller to withdraw if their sales targets aren’t met.
Off-the-plan sales can be a great opportunity to buy into an exclusive development in a location you want to live in.
Plus, it can provide an extended period of time to plan your transition, with ample time to sell an existing home.
You may also get the opportunity to choose from a range of finishes for tiling, floor coverings and cabinetry.
Make sure you read and understand the contract.