No matter how many properties you own - if you’re buying your first home or have an established portfolio - savvy buyers are always looking for incentives to help make their money go further. While the East Coast property market teeters on the precipice of the one-two sucker punch of potential bubble burst and continually rising purchase prices, CoreLogic has highlighted Adelaide’s metropolitan area as home to some of the best value and best lifestyle options available in the country.
Buying Off-The-Plan can be a great way to take advantage of not only government incentives, but also discounts provided by developers that will ultimately contribute to the completion of the project. There are certainly some risks involved as well,
Let’s have a look at what buying Off The Plan can offer you -
What does buying Off The Plan mean?
Purchasing off the plan is relevant to apartment buildings in South Australia. It means that your purchase is made before the building has been built. Since 2016, the Off The Plan Concession has applied to not only apartments built within the CBD but across the whole of South Australia. It is a Government based incentive to encourage investment in newly developed buildings by reducing stamp duty costs by as much as $15,500.
What are the benefits?
- Off-The-Plan purchases allow you the ability to customise your property, selecting the finishes and tweak the floor plan to your preferences.
- The purchase price can often be lower compared to established properties, as the developer is often looking to establish financial stability in the project before construction starts.
- It’s not uncommon for your property to increase in value as it’s built, providing you with immediate capital growth on your purchase.
- In most instances, you’ll only need to pay a deposit to the developer upfront. The remaining balance is settled on the completion of the property. This allows you more time to save up before settlement.
- If structural or interior building issues emerge while the building is being completed, you should be covered by Builder’s Warranty Insurance, meaning you won’t have to pay for repairs.
- Tax depreciation is more on new properties, meaning you can maximise your after-tax cash flow.
- In South Australia, the Off-The-Plan Concession provides a significant reduction in the amount of stamp duty paid on your purchase. Any incentive to reduce your upfront costs, as well as save you on your long-term repayments, is absolutely worth taking advantage of.
Things to Consider before buying Off-The-Plan
- Lending can be an issue. Banks and lenders will offer conditional approval for Off-The-Plan purchases, but they won’t actually lend you money until the property is built and they have performed a valuation of the finished product.
- You’ll need a conveyancer or solicitor to look at the contract closely to identify potential costs or conditions that might impact you down the line. Some key questions should include:
- Who is responsible for any defects?
- What happens if the project is completed either before or after the scheduled date?
- Can you resell the property before it’s complete?
- There is always a risk that the development won’t go ahead. You should get your deposit back, but tying up your money in a failed venture means you may have missed out on other investment opportunities.
- If the market falls or interest rates rise between the time you agree to buy and the actual purchase of the property, there’s nothing you can do.
- Though you may plan thoroughly, the final product may not match what you’d originally purchased for a variety of reasons. You won’t find this out until the property is complete.
- It’s not uncommon for developments to experience delays. Best to keep an eye out for any ‘sunset clause’ in the contract of sale which binds the developer to a completion date.
- Other developments may be scheduled in the same area, so be sure to check with the local council to see how the location may change by the time you’re handed the keys.
How do I apply?
You can apply for the concession even after you have purchased your Off-The-Plan apartment. Applicants are required to complete the Application for Stamp Duty Concession on the Purchase of an Off-the-Plan Apartment and submit it to RevenueSA for processing. If you require more information, contact Revenue SA directly.