Buying Property 'Off the Plan'
RNG Lawyers Property Law team, Barry Northfield.
It has been possible to purchase real property “off the Plan” in Victoria for decades. The major factor that was a driver for this type of purchase was a significant saving in stamp duty payable by the purchaser due to concessions provided by the State of Victoria to encourage the building industry and home ownership. This aspect in many cases encouraged people to sign contracts to buy property that was not at that time built and with contracts that gave minimal protection to the purchasers and significant discretion to builder/developers as to the timing of the construction and the quality of the finished product.
As we move into mid 2021, something's has changed, and a lot are not in favour of the purchaser. The stamp duty benefits for contracts signed after 1 July 2017 are only available to purchasers who will occupy the property built as their principal place of residence and the value of the property is under $750,000 and are not available to people seeking to buy investment properties. With property values in Melbourne at historical highs the concessions are now of limited value.
Further, there is a growing awareness of significant building defect issues in a large number of properties that have been constructed over the last 15 years with the most serious relating to inflammable cladding that has been used on many residential and commercial buildings across Australia, that now require extensive and expensive rectification works.
Buying property off the Plan can still be an appropriate method for property purchases but it needs to be done with purchasers fully informed of the issues and potential risks involved before they sign contracts. We recommend that expert advice be sought before contracts are signed and we are experienced in providing this advice across a wide range of properties.
If you have any queries, please contact Deborah McCloskey in our RNG Lawyers Property Law team on 9739 7377 to assist you with this advice.