With new minimum design standards
coming into effect in March 2017, thousands of buyers of off the plan apartments in Victoria that are due for completion this year could struggle to finance their property and face losing their deposits if planning on using one of the big four banks.
The new standards that are shortly coming into effect will set a variety of new minimum standards. These include the amount of functional space, natural ventilation, energy efficiency as well as access to adequate daylight, landscaping and private and communal open space in a ploy to provide more desirable apartment living, enhance liveability and sustainability alongside quality housing for future generations, whilst remove the trend of smaller micro apartments.
Since 2013, the median size of a one-bedroom apartment within inner city Melbourne decreased from 55sqm to 44sqm in 2016, according to research from Oliver Hume Real Estate Group.
However, if your newly purchased off the plan apartment is smaller than 50sqm
, then you might want to re-think your finance options as the big four banks (NAB, CBA, ANZ and Westpac) have all created a policy for these new standards and refuse to lend to purchasers of one-bedroom apartments that are smaller than 50sqm.
So what does these new design standards mean for purchasers?
If your new apartment is less than 50sqm in size, then you may need to dig deep and come up with a 20 per cent deposit or more by the time settlement arrives, which could be a real challenge for many and may leave many buyers unable to settle.
Unfortunately, a large proportion of these new apartments that are due to be completed this year were sold off the plan before these new guidelines came into place; however, developers have recently been making planning applications for larger sized apartments to meet these new guidelines going forwards.
Lenders are mainly concerned about the resale value of the apartments that don’t meet these new minimum standards. Banks and lenders are also having to be more prudent about apartment loans, especially those that are considered high-risk. Typically, banks tend not to approve finance for properties that are less than 50sqm in size.
Speak to a Mortgage Broker
If you are worried about what these new guidelines might mean for you, then it’s best to speak to your Property Consultant and our in-house Mortgage Broker may be able to help you find another lender instead. Although the big four banks may not be able to offer you finance, there are plenty of other lenders that will.
There’s still appeal for smaller apartments
It is important to remember that many of the residents in Australia come from countries such as Asia where high density living is the norm and they are used to living in smaller apartments. If your property is situated in a great location, close to the city, transport, retail and dining options, then there will still be high appeal for your new apartment from renters and future buyers alike who want convenience at their doorstep.
Also smaller apartments and studios tend to be more affordably priced, helping first home buyers get a foothold on the property ladder. However, you just need to bear in mind that lending will be tougher, especially for apartments less than 40sqm in size, and a larger deposit is likely to be required by some lenders.
If you’re looking to buy a new apartment off the plan in Melbourne, then you should consider the following first:
- Understand the new design guidelines;
- Buy an apartment that is at least 50sqm in size;
- Speak to our in-house Mortgage Broker and consider using a different lender to the big four banks;
- Meet with iBuyNew to talk about your property options.
At iBuyNew, we have an extensive range of new apartment developments within Melbourne to choose from, many of which have one-bedroom apartments of at least 50sqm.
To find out more about Melbourne apartments and what is currently available to buy, get in touch with the iBuyNew team today by calling us on 1300 123 463
Published on 25th of January 2017 by Marty Stanowich