Join our investing community

Tips for buying off the plan

Discussion in 'Real Estate' started by Nigel Ward, 30th Apr, 2007.

  1. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
  2. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Did you also know that Victoria is the only state that doesn't charge for stamp duty on OTP purchases?
    Great list there, Nige. Thanks for the link.
     
  3. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Indeed I did. I suspect that was one factor which helped fuel the Henry Kaye deposit bond excesses of the early noughties.

    Cheers
    N.
     
  4. tonyused

    tonyused Active Member

    Joined:
    9th Jan, 2008
    Posts:
    32
    Location:
    Perth, Western Australia
    Last edited by a moderator: 11th Jan, 2008
  5. Muzza

    Muzza Active Member

    Joined:
    23rd Nov, 2006
    Posts:
    38
    Location:
    Brisbane
    Im looking at buying in QLD - I gather stamp duty is payable at settlement...

    I was wondering if anyone has bought off the plan before and was it a success??? If so then was there any criteria they used when making their purchase and what were they?

    Also is there any specific contract conditions that anyone would recomend having? i.e. sunset clause etc...
     
  6. DaveA

    DaveA Well-Known Member

    Joined:
    19th Feb, 2007
    Posts:
    617
    Location:
    Sydney, NSW
    Sunset clauses are wanted by the developer as it gives them an option to "slow" the building progress so they can not meet the deadline in a rising market....

    My personal criteria would be to have a very well established developer as with smaller developors there is always the potential for him to go bankrupt and leave you with a half built apartment. Same goes with the builder. However if i had to choose i would have a established builder over a established developer but this will still lead to risks of the developer not picking up faults with the design that someone established would.

    I think in nsw stamp duty is payable within 6 months of exchange however you can apply to get an extension from the OSR (i think there was a thread about this late last year)
     
  7. tonyused

    tonyused Active Member

    Joined:
    9th Jan, 2008
    Posts:
    32
    Location:
    Perth, Western Australia
    By buying ‘off the plan’ you enter into a contract before construction commences and therefore only pay stamp duty on the value of the vacant land.

    One of the most crucial parts of the contract would be the sunset clause as time is of the essence. You should make sure you know this clause off by heart and it's also crucial to the timing of your finance.
     
  8. Muzza

    Muzza Active Member

    Joined:
    23rd Nov, 2006
    Posts:
    38
    Location:
    Brisbane
    "By buying ‘off the plan’ you enter into a contract before construction commences and therefore only pay stamp duty on the value of the vacant land."

    So if you were buying a unit in a highrise then you would only pay stamp duty on the value of the land prior to construction? Sounds a little too good to be true... Forgive me if im wrong though - this is all a learning curve for me.
     
  9. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Depending on which state or territory you purchase in (rules do vary) this is accurate, at least in NSW. The stamp duty payable is based on the land value at the time the contract of sale is made between purchaser and vendor, which, in OTP purchases, is most often prior to construction; hence the lower SD due. However, should the values fall between contract and settlement date, then you run the risk of overpaying for the land component only.