14 great reasons to buy property off the plan
When it comes to buying a property, we all want to get the best deal possible, but with more and more people chasing property, it can sometimes be hard to enter the property market, and that’s not even taking into account the cost of property ownership.
One great way of entering the property market is by buying a property off the plan. Buying off the plan essentially means that you are buying a property that has yet to be built or completed and you are relying on floor plans, price lists, schedule of finishes and architect drawings to make your decision to buy.
You might think that buying a property without physically seeing it is a bit risky, but many Australians are turning to off the plan property due to the number of benefits and incentives only a new property can provide.
Off the plan properties are attractive to both owner occupiers as well as investors, but these types of properties do tend to get some bad press in the media. However, by doing thorough research and due diligence beforehand, and working with a reputable company like iBuyNew that understands the property market inside out, you will be better equipped in purchasing a property off the plan that provides you with stable and solid growth for years to come.
So what are the reasons that makes buying a property off the plan so appealing? Here are 14 great reasons why you should consider buying property off the plan today.
1. It’s brand new
One of the things property buyers and renters love about new property is the fact that it is brand new and has never been lived in. If you are an investor, then you will find that rental tenants also tend to prefer new property and are happy to pay a premium to live in one.
2. More choice
Buying property off the plan also provides you with more choice in terms of floor plans, level, aspect, colour scheme and more. Getting in first, gives you the best choice so it pays to work with a company like iBuyNew who can keep you regularly updated with the latest projects which might not have hit the market. This allows you to buy exactly what you want, where you want.
It’s also good to bear in mind that a development will tend to have the same floor plan a number of times on different levels, so this gives you greater chance to own the property you want. With an established property, there is just one chance and more competition.
3. Massive stamp duty savings
Besides the actual cost of the property you are buying, one of the massive costs of purchasing any type of property is the stamp duty. On a $500,000 property, stamp duty could amount to almost $18,000 in NSW and nearly $22,000 in VIC. However, if you are a first home buyer planning to live in the property then you are exempt from stamp duty in NSW on a $500,000 property, whilst in VIC this can be reduced by half. These cost savings are definitely not to be sniffed at.
4. Capital gains likely
The great thing about buying a property off the plan today is that you can secure your property at today’s price, whilst benefit from capital gains by the time the property settles. Depending on the size of the development, it can take one to two years or longer for a property to settle. This can mean that your property is worth a lot more than when you first paid for it as property values tend to increase in value, particularly in a booming market.
It therefore works in your favour to buy at the bottom of the property cycle or in a rising market to enjoy the greatest amount of growth.
5. More time to save
Buying a property off the plan also gives buyers more time to save. It typically takes approximately two years for a property to settle, which allows you more time to save towards a larger deposit, or build up an emergency fund to help you in case things get difficult, such as becoming unemployed. However, you should have created a plan to help mitigate these risks.
6. Reduced power bills
Purchasing a brand new property means that the property must meet strict energy efficient requirements. As it’s new, the property will be more equipped for modern day living with power-saving appliances, double glazing and more. Many new developments today are energy rated buildings which will help to keep your energy costs down, compared to an established property which might be much older.
7. Repair and maintenance cost savings
As the off the plan property is brand new, there tends to be less repair and maintenance costs, giving you more peace of mind that things won’t break straight away.
8. Depreciation benefits
For those that are buying a property off the plan as an investment and plan to rent the property out, you could also save yourself thousands of dollars in tax deductions through depreciation. The first thing that you should make sure you get is a reputable Quantity Surveyor to create a full depreciation schedule once your property has settled, ideally before tenants move in.
The highest amount of depreciation benefits are collected in year one, and you can claim on both the building as well as the fittings and fixtures such as carpet, blinds and appliances. In some cases, you can even right off the full costs of appliances immediately, depending on the cost.
Claiming your full depreciation benefits will help to lower your holding costs and help you save in tax.
9. Flexible deposit options
The most popular way to pay the deposit is by cash, but there are other options that you can also consider if you cannot access cash. Depending on what the developer prefers, you could also use a bank Guarantee or Deposit Bond to secure your deposit.
10. More affordable
Buying a property off the plan also tends to be a more affordable option as prices go up once the development has completed. To get the cheapest price, it works in your favour to get in as early as possible, as developers tend to push their prices up, as more properties are sold. It also pays to buy in a suburb that is up and coming. Suburbs that are undergoing transformation will see property prices soar once retail, new transport links or new schools have been completed, which will attract more and more people to live in these areas.
If you have missed the boat, then you should also look out for the ripple effect, with neighbouring suburbs next to growth suburbs generally being the next best place to buy an affordable property.
11. 10% deposit required – sometimes a 5% deposit
Buying property off the plan only requires a 10% deposit, and sometimes you might be able to secure your property with just a 5% deposit. This makes it even easier to get your foot on the property ladder. Ask your iBuyNew Property Consultant whether you are able to secure a property with just 5%.
12. Exemptions and concessions available
The difference between buying a property off the plan and one that is already established is that there are many concessions and exemptions available, especially if you are a first home buyer. Eligible first home buyers can take advantage of the first home buyer grant with savings between $10,000 - $15,000 depending on which state you live in. There are also stamp duty savings available as mentioned previously which could save you almost $18,000 in NSW on a $500,000 property.
13. Delays mortgage repayments
Unlike buying an established property, an off the plan property only requires you to pay the deposit. You don’t start paying a mortgage until the property has completed and this could be two years down the line, allowing you more time to save and tackle the more nitty gritty details at a later date such as finding a lender, rental tenants etc.
14. Deposit held in trust
When you buy a property off the plan, your cash deposit is held in trust and thereby protected. Your deposit tends to be invested on the buyers behalf whilst you wait for settlement. By the time settlement arrives, you could have earned a few thousands dollars in interest which is a great little bonus!
So as you can see, there are plenty of reasons why buying a property off the plan is appealing to both owner occupiers and investors. If you buy at the right time and in the right location, you could benefit from huge capital gains before you even start paying a mortgage. As a first home buyer then there are plenty of incentives and concessions to make the most of, but bear in mind you cannot take advantage of these again if you decide to buy an established property instead.
Investors can also reduce their tax bill through higher depreciation savings and lower maintenance costs.
To find out more about why you should be buying a property off the plan, it’s best to speak to one of our expert Property Consultants who can show you how much owning an off the plan property can benefit you.
Call us today on 1300 123 463.