More properties and units with strata titles are on the rise across major cities in Australia. Because of this, most homebuyers are jumping into the trend of buying off-the plan. Generally, off-the-plan properties are advantageous for both investors and first-time homebuyers. More buyers prefer off-the-plan properties over established ones as it is like purchasing their dream house, where the building of the house has either yet to start or is still in the initial stages of development.
While there are many benefits to purchasing off-the-plan houses, there are also disadvantages. Most homebuyers, unfortunately, make mistakes because they are not informed regarding the differences between the conveyancing process for off-the-plan houses and established housing.
Licensed conveyancers from AdvantageSettlements.com.au explain how conveyancing for off-the-plan properties differs from conveyancing for established properties.
1. Banks have stricter underwriting rules for off-the-plan properties.
Mortgage guidelines for established housing and off-the-plan properties are very different. You may not get financing in the future if the construction of the house is not yet complete. Banks or lenders will not provide unconditional approval until the exchange of contracts. Furthermore, they will assess the value of the property only at the time of settlement. There are cases where buyers may need to make a larger down payment than expected because of the lender’s lower valuation of the property. Make sure to be informed about the loan process early on.
2. The contract of sale should be more comprehensive.
A common problem encountered by many off-the-plan property buyers is they realise that the finished project is not exactly what they were promised. Conveyancing specialists say that the best way to avoid this pitfall is to include every detail in writing. Some property developers often present general contracts so they have freedom to alter designs and other features of the property. It is best to have a licensed conveyancer so that they could negotiate on your behalf and draft a contract that is as thorough as possible.
3. Settlement for off-the-plan houses may be put off.
For established dwellings, the settlement date is certain. But, for off-the plan, you will only know the date of settlement when the subdivision plan gets recorded or the certificate of occupancy is issued.
Be aware of these differences to avoid mistakes when it comes to buying off-the-plan properties. It is best to work with a conveyancing specialist for guidance with the entire process.