Off-the-plan purchases: what to know before signing

Off-the-plan purchases come up a lot in Brisbane, especially with the amount of apartment and townhouse development happening across the inner city and surrounding suburbs. There can be real advantages to buying off-the-plan — but there are also risks that aren't always obvious until you've been through the process a few times. Having worked in construction and development and as a valuer, I've genuinely seen it from every angle, so here's what I think buyers should know before they sign anything.

What "off-the-plan" actually means

Buying off-the-plan means signing a contract to purchase a property — usually an apartment, townhouse, or house and land package — before it's been built, sometimes before construction has even started. You're buying based on plans, renders, and a sales brochure, not a finished product you can walk through.

That gap between what you're promised and what you eventually receive is where most of the risk (and occasionally, the opportunity) lies.

The potential upsides

• Price certainty at today's rates — you lock in a price now, and if the market rises before settlement, you've bought at yesterday's price

• Time to save or arrange finance — the settlement period (often 12–24 months or more) gives you time to save a larger deposit or reorganise your finances if required.

• Depreciation benefits* — new properties generally offer stronger depreciation benefits for investors than established ones (* this maybe subject to change due to recent changes to tax laws)

• Choice — buying early in a project often means better choice of floor plan, aspect, and position.

  
  

The risks buyers need to understand

Valuation risks at settlement. This is one I've seen catch people out. You might sign a contract at, say, $500,000. But if the market softens, or if the finished product doesn't quite match the brochure, the bank's valuation undertaken at settlement could come in lower than your contract price — leaving you to cover any shortfalls, and potentially putting you in a position of having to renegotiate your finances in a rush.

Sunset clauses. Off-the-plan contracts include a "sunset date" — if the project isn't completed by then, either party can potentially terminate. In a rising market, this has occasionally been used by developers to walk away from contracts and resell at a higher price. It's essential to understand your rights here, and I'd always recommend a solicitor review this clause specifically.

Changes between plan and product. Most contracts include some flexibility for the developer to make "minor" changes to finishes, layout, or specifications. It pays to understand exactly how much latitude the contract gives them, and what recourse you have if the finished product falls meaningfully short of what was marketed.

Developer and builder track record. Not all developers and builders are equal. It's worth researching their history — have they completed projects on time and to spec before? Have there been disputes, defects, or delays on previous projects? A good developer with a strong track record can dramatically reduce your risk.

Market movement over the build period. Because settlement can be a year or more away, you're exposed to whatever the market does in that time — for better or worse. This cuts both ways, but it's worth going in with eyes open rather than assuming prices only move in one direction.

Impacts from surrounding development. As our city continues to grow, more developments are coming up out of the ground all the time. You need to be mindful that current skyline or expected views may change prior to the completion of the development. You can't eliminate all risks in this area but being aware of any surrounding projects either planned or lodged with Council can help give you some peace of mind in this area. Knowing what other projects are planned in the surrounding area, can be a key consideration when selecting a property.

Questions worth asking before you sign

1. Who is the developer and builder, and what's their track record on past projects?

2. What happens if construction is delayed — what are my rights around the sunset clause?

3. How much latitude does the contract give the developer to change finishes, layout, or materials?

4. What's included in the price, and what's an optional upgrade?

5. Has an independent valuer or building expert reviewed the plans and master contract?

6. What's my finance contingency if the bank's valuation at settlement comes in under the contract price?

7. What other development is planned in the surrounding area? Are there any projects planned that might negatively impact the development?

   
   

The bottom line

Off-the-plan can be a genuinely smart purchase — but it rewards buyers who go in with their eyes open, ask the right questions, and get the right advice before signing. This is a key area area I can help clients navigate. If you're considering an off-the-plan purchase, it's worth engaging an experienced property professional to have a look at the deal before signing on the dotted line.