We’ve all heard the horror stories. Unsuspecting property buyers purchase a dream property off the plan, only to be beset by unscrupulous developers, building defects, and unimaginable property flaws.
Whether purchasing a place to live or for investment, buying off the plan can be a positive experience and for many, it is a straightforward process. However, to protect your investment and ensure a successful transaction it is important to do your research, be aware of the pitfalls, and ask the right questions.
Apartments, townhouses, and villa complexes have all evolved dramatically in the last two decades. Green spaces, electronic vehicle (EV) charging, environmental sustainability metrics, rooftop gardens, gymnasiums, swimming pools, and other amenities are rapidly becoming the norm. These innovations and desirable qualities also bring with them the need for further scrutiny to ensure buyers have transparency and clarity on fees, maintenance, bylaws, and other administration.
The basics
Researching and doing your due diligence is key when looking to buy off the plan. There are several avenues to pursue to gather the fundamental information you will need.
It may sound obvious, but asking questions and doing the research on your developer upfront will help to evaluate their credibility. Ask the developer about their past projects to ascertain their track record and history of success. Google the developer, their building license number, and the company to see what’s been reported. Look for any news media stories, customer feedback, or reporting of disputes and building defects in the past. In New South Wales, iCIRT is a government risk-rating tool consumers can use to assess a developer’s history to make a more informed decision.
Along with investigating the developer, partake in some market research on the area you’re looking to buy into by reaching out to the local council to see what other developments are in the pipeline. For instance, are there lots of other apartment blocks going up in the vicinity as this has the potential to affect the price of your purchase in the future?
Ensure a thorough review of any contract or legal document and read the fine print. Look at the measurements and details of what you are purchasing to make sure they match up with any marketing collateral or sales material you’ve been provided.
Understand the obligations that come with community and strata living. Request a copy of the bylaws or the Owners Corporation rules in your dossier. These guidelines will help you make your decision, especially around aspects of your lifestyle. Does the property allow pets? Can you holiday-rent your apartment? What are the restrictions to property improvements or on outside spaces such as balconies?
Once the property is complete, consider an independent building inspection, and if any issues are identified contact your developer immediately to find out steps for remediation. Building is not a precise discipline and even the most highly-rated builder is likely to experience some minor defects in the completion and handover of a new residential complex.
It’s easy being green
Whether it’s your home or an investment property, if you are seeking to future-proof your property its environmental integrity and sustainability are important. Many newer complexes have green credentials baked into the building design and its heating and cooling. Some have green walls, a green roof, or green space of some kind to serve as sustainable building elements or enhance energy efficiency.
Buyers will pay a premium for energy efficiency as recent research has highlighted. A complex with these measures in place already will maintain the appeal and value of your investment into the future. And with the EV revolution upon us, properties with charging infrastructure in place will become not just coveted but standard, so attention to this kind of infrastructure will pay dividends down the track.
Consider insurance
With the rising cost of insurance, thanks to the catastrophic bushfires and floods we’ve experienced over the past couple of years, insurers are becoming more stringent with their risk profiles and refusing cover for schemes that don’t properly maintain their common property or fail to pursue the rectification of building defects. Consider becoming a member of the body corporate or strata committee so you can actively be involved in ensuring your building and common areas are properly maintained so insurance costs don’t spiral out of control.
Looking forward
There is a huge lack of education in the sector, from the point of existing market sales to off-the-plan sales. Consumer protection needs to be embedded in owner protection, and it is mutually beneficial for both parties to ensure comprehensive, efficient, and transparent information.
It occurs more than we would like that people receive property advice that isn’t always correct and contravenes the letter of law. If you do your due diligence, review the easily available information, and ask the right questions, you are well on your way to a smooth investment to enjoy for years to come.