As Sydney’s population grows, especially with new migrants such as the Indian community, the trend of Off-the-Plan purchases grows. The push for higher density is growing, with Sydney’s population growth, rising from four million to 6.5 million in the next 15-20 years. Off-the-Plan purchasers includes apartments/townhouses under construction, land subdivisions and also home/land packages in release areas.
Off-the-Plan, purchasers are look for something new, something exciting, with expectations in design, features, specifications, finishes/fixtures, with either a new suburb (such as The Ponds near Blacktown) or a suburb going through transformation (such as Rhodes near Homebush Bay). Existing key suburbs such as Chatswood, Burwood, Strathfield and Wolli Creek are attracting property investors buying Off-the-Plan apartments, to maximise their tax benefits, especially with depreciation allowances in the first few years after purchase.
To stimulate residential construction and the building industry, the state government does have a new home grant of $5,000.00 for purchases up to $650,000.00 (or $450,000.00 vacant land) offset from the stamp duty payable, which details can be found on http://www.osr.nsw.gov.au/grants/nhg/about First home buyers, there is $10,000.00 (as from 1 January 2016) first home new home grants and full stamp duty exemptions for first home new home, for purchases up to $550,000.00, which details can be found on http://www.osr.nsw.gov.au/grants/fhog and http://www.osr.nsw.gov.au/grants/fhnh
When purchasing Off-the-Plan properties, your conveyancer or solicitor will do a Contract review that is different from an existing property. Main features in the Off-the-Plan Contract that are unique, is the Vendor right to make alternations to the property/development in draft form off-the-plan, the Sunset clauses and also the defection liability provisions.
In the Contract off-the-plan, the Vendor must ensure to complete the construction of the building and the finishes. The Vendor has a right to make amendments to the draft Strata Plan, documents and instruments, by-laws, including any amendments to the Lot, development scheme details, easements/encumbrances, leases relating to the development scheme/draft strata plans, services, approvals, finishes, unit entitlements, allocation of car spaces etc.
When it comes to the property’s finishes and fixtures, the any amendments to finishes must be of the same quality. Rights to rescind for a purchaser is usually restricted to any easement that causes serious impediment to the property you are purchasing, or a reduction in size, that is usually in most Contracts, greater than 5%.
Settlement usually occurs 2-3 weeks after the Vendor serves notice, that the draft plan (strata plan or land submission plan) has been registered at the LPI NSW (Land Titles Office), when the draft plan with approvals, goes beyond the normal six week Contract property, that usually occurs with existing properties. Defects period usually goes for 2-3 months from the successful completion/settlement date of the Contract, which notices to the Vendor in defects must be in writing, limited to the number of notices to be services and the terms/conditions of defects in the Contract. Any disputes, are usually referred, in stipulated time, to an expert appointed by the President of the Royal Society of Architects NSW Chapter. Costs for the single expert can be bore by either parties, or the party chosen by the single expert in their resolution.
Most Off-the-Plan have Sunset clauses, a maximum time that the Vendor to achieve finance and approvals, such as an 18 months or two year sunset date clause. These provisions may have right for the Vendor extend time, if a reasonable delay occurs, such as registration, weather, civil or union unrest etc. Such provisions provides a reasonable time, delay, such as six months or whatever the Contract stipulates, before the Purchaser can exercise their right to rescind, as the Vendor is taking too long for registration, finance or any some other approval/qualifying requirement.
Recently, the sunset clauses laws have changes, as in the past Vendor were taking advantage of purchasers, rescinding to go with another purchaser, who offers a better price. Such previous practices from these types of vendor developers are now banned, as from November 2015, under Minster Victor Dominello MP reforms, as Vendor now require written consent from the Purchaser, to rescind the Contract.
For further details, go to http://www.fairtrading.nsw.gov.au/sites/ftw/About_us/Have_your_say/Buying_property_off_the_plan.page