You’ve decided to build your own home, this option is wonderful for those who want to customise certain options or just love the idea of walking into a home with everything that is brand new! But what where should you start?
There are so many costs associated with building a home, many of which you may not have factored in such as, utility connection fees, site fees, architect fees and so on. It is very easy for your initial budget to be blown out of the water when things out of your control happen. Such as poor weather, difficulty sourcing materials and tradesperson issues.
You can trust Account(able) to get you through this multistep process and alleviate some of the stress and pressure that comes with building your own home. We have the knowledge and diligence to ensure everything runs smoothly. Let’s make your dream of building your home a reality
New home sales have skyrocketed in recent times, partially due to investors and owner-occupiers buying off the plan. The concept is straightforward: put up a deposit (usually 10 per cent) to help the developer fund construction and pay the balance when the build is complete. If you decide to go with this option, we diligent to research your developer thoroughly and ask questions up front, such as turn around time on completion, if any additional fees are projected and how many similar projects they have previously been responsible for.
The way it works is the developer sells as many properties off the plan as possible to attract sales obligations then they secure from their lender to the finance the build and turn a profit. Buyers are effectively handing over their deposit for the promise of an apartment/townhouse/house that they won’t see for one to two years (or more in some cases), prices are set at current market rates with incentives often offered to entice buyers in such as cashback deals and luxury updates.
Once the developer has received your deposit, they should provide you with a contract that specifies the details of your purchase including the completion date for the development and the deadline for when a decision must be made as to whether the development will go ahead. That decision usually depends on whether sufficient finance has been secured, so don’t get too excited just yet.
If the developer backs out of the project or passes the decision deadline, you should be entitled to a refund of your deposit, but this depends on the conditions of the sale contract you agreed to, so it’s important to read this document carefully and if seek financial or legal advice.
While buying off the plan may look like an exciting opportunity, it pays to be diligent and seek out as much information as possible before entering into a contract. If all goes according to schedule be prepared for a lengthy wait between initial sign on to completion of your property.
One of the biggest advantages of buying off the plan is time. Unlike traditional property purchases with relatively short windows to round up the total finance, you will have at least 12 months, if not longer, to settle. Savvy buyers will take advantage of this extra time to save their pennies and reduce their borrowings.
If you dream of a new home but have nightmares at the thought of building one, an off-the-plan purchase may be the perfect compromise. Although you will not get to design everything as you would with a custom-built home, most off-the-plan developments allow some customisation of finishes and fixtures. Make sure your contract outlines what you can tailor and that you are clear on any additional costs.
Various incentives are still being dangled in front of first-home-buyers, which may add to the appeal of buying off the plan.
Concessions vary across Australia and some have been curbed since January 1, so visit your State or Territory web site for the latest information on grants and exemptions. You can also research your eligibility for stamp duty concessions on new properties at www.stampdutycalculator.com.au
Off-the-plan apartments are often pitched heavily at investors due to the tax* benefits that come with depreciation on new properties and rental guarantees. Tax savings will depend on your individual circumstances, but generally the newer the property, the higher the depreciation allowance for the building and fixtures.
Investors may also be offered attractive rental guarantees for a limited period. Make sure you do your homework on rental returns on similar properties in the area before accepting the developer’s terms. Be wary of over-inflated rental guarantees. Builders will sometimes promise a high-rent yield to lure investors, build the cost into the property price and then subsidise any gap themselves for a short period. When the rental guarantee expires, you may find the actual market rent falls well short of what you originally pocketed. If investing, make sure you have the option to manage the property yourself or with your chosen property manager from the time you take possession.
Many buyers get swept up on a wave of rising property prices when they hand over their deposit in exchange for a floor plan. Historically, property is a consistent long-term performer, but property prices can plateau and even wane at the mercy of economic factors.
Buyers also need to be wary of over-supply, which may devalue their property. Queensland’s Gold and Sunshine Coasts are carrying a glut of apartments on the back of many years of off-the-plan sales, while the skylines of capitals such as Canberra have real estate commentators urging caution.
Make sure you consider the bigger picture if buying off the plan. Research how many other developments are planned in the area and whether any increase in apartment numbers is justified by new or improved infrastructure, such as transport corridors, business precincts, universities or hospitals.
Make sure you purchase from a reputable builder and take the time to research their previous projects. Do they use quality contractors? Do they deliver projects on time? Make a point of visiting some of their projects so you can assess the finished product first-hand.