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Off-the-plan guide for investors

Market insights 13 August 2020 Read time: 7 minutes

Owning a varied portfolio of properties can mean more than just purchasing houses in different locations, states or cities – it also entails buying diverse types of properties, from established houses, townhouses or apartments and units. When researching potential investment properties in these categories, you will often be presented with the decision of whether to buy new or old – which means considering buying off-the-plan.

Purchasing off-the-plan is often a smart move for investors, as brand-new properties have low maintenance costs and can attract higher rent. Off-the-plan dwellings often sell for less than the housing median price, developer incentives add to the financial appeal.  

As an investor, when you buy a property off the plan, it means you’re buying into something that hasn’t been built yet, which naturally comes with a level of risk. It also means paying a deposit, and having to wait to see any rental income or a return on your investment until the development is finished – which is you pay the balance of the purchase price. The size of the deposit will depend on the developer, but it’s usually between 5 percent and 20 percent for investors and owner-occupiers alike. 

The benefit for investors in the off-the-plan market is that developers often offer incentives – such as low upfront deposits or cash grants (some developers are currently matching the $25,000 HomeBuilder grant, for example) – that are usually only open to owner-occupiers under government schemes. By including investors in these buyer incentives, they are expanding their potential sales, which is of course beneficial to the developer. 

Should you purchase an investment property? 

The Australian economy and property market has undoubtedly experienced unprecedented factors in recent times, however many property experts still assert that 2020/2021 presents a unique opportunity for discerning investors.

When considering an off-the-plan property for investment, you should contact the developer of the project to see if they offer any incentives or benefits. Read their terms and conditions very carefully before signing a contract is also important so you know exactly what you’re committing to, and seeking some advice from a lawyer or conveyancer before signing the contract would be advantageous.

There are a range of factors that suggest the next year presents a historical opportunity for investors who are shrewd and do their research prior to investing. Property investment of course involves risk. It is vital that you understand the risk and consider consulting a financial adviser before making any decisions.

Key benefits of off-the-plan for investors 

Low maintenance costs

Thanks to the brand-new build quality and most developers offering building and appliance guarantees, maintenance costs for off-the-plan properties are usually much lower than established homes. 


Instead of needing to pay the deposit right away as in most established house sales, the developer may agree to let you secure the purchase using a deposit guarantee from your bank. This could allow you to keep earning interest on your funds while your home is being built.

Purchase price

The benefit of purchasing off-the-plan before construction has commenced is access to discounted prices or prices that are below the median house price for the area, as developers are motivated to sell so they can secure any necessary funds from their lenders. 

Capital growth

There’s potential for the property to increase in value during the course of construction.

Stamp duty/Transfer duty savings

Buying off-the-plan means purchasing a brand-new home, so you could save a lot of money on stamp duty. Most states offer discounts on newly-built residences and, if you sign the contract before construction begins, stamp duty/transfer duty can often only apply to the land value, not the finished product – refer to your state government website for state and territory specific information.

Design Input

Many developers allow buyers to have input over the design of a property, meaning you could have some input on floorplans or colour schemes. This is ideal if you plan on renting the property out, as you can ensure you select a scheme that will hold up well with tenants and cost less on maintenance. 

Relevant off-the-plan legislation

Each state and territory government has slightly different legislation governing off-the-plan sales, so you should refer to advice on a state specific level. We have compiled some key recent legislation changes that apply in some states – including NSW and Victoria – that have helped to mitigate risks and uncertainties affiliated with purchasing a property off-the-plan. 

Increased contract transparency

Through the introduction of Disclosure Statements – i.e. a document outlining what the government deems to be the main or more confusing points of the contract after their thorough review – buyers will be able to more easily understand the key points of their contract. 

A disclosure statement covers points like the sunset clause (refer to our Key Terms Defined for more info on the Sunset Clause), if there are any additional fees or charges beyond the deposit and settlement payments, if development approval has been obtained by the developer, expected construction commencement and completion dates, any on-going owners corporation or strata fees, and other such key information.

Notification of changes

Moving forward, if a developer plans to make changes to a ‘material particular’ (meaning an aspect of the development pertaining to the physical construction or appearance of the dwellings), which a buyer can prove would have meant they would not have entered into the initial contract, the contract can be terminated. Alternatively, the buyer can seek compensation of up to 2 percent of the sale price, but if compensation is awarded the contract can no longer be terminated under this new section of the legislation.  

This puts more power in the hands of the purchaser, as it can often be nerve-wracking entering into a contract of sale for a home that you are not able to physically inspect. These new Notification of Changes laws aim to provide peace-of-mind that buyers understand and agree with the end result of the project and receive regular updates throughout the process.

The cooling off period 

When purchasing an existing dwelling, the cooling off period is 5 days after signing the contract. This period has now been extended to 10 days for off the plan purchases, which recognises these contracts are often lengthier and more complex than those for existing dwellings. 

Deposit money

From the 1st December 2019, all deposits for off-the-plan purchases must be held in a trust or controlled money account during the contract period. This protects buyers from losing their deposit in the event of the developer’s insolvency.


Purchasing off-the-plan is often a smart move for investors, as brand-new properties have low maintenance costs and can attract higher rent. Off-the-plan dwellings often sell for less than the housing median price, developer incentives add to the financial appeal.  


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