Some of the more common pros and cons of buying off-the-plan properties include:
• The idea of paying today’s price for something that may be completed in two or three years time attracts some people, especially in a rising market.
• You only pay stamp duty (transfer duty) on the land when buying house and land packages (provided construction has not commenced).
• You can have more input into the design and choice of fittings and finishes.
• Lower purchase price due to developers keen on selling as many properties as early as possible, and therefore prices are usually very competitive.
• Tax benefits for some purchasers as off-the-plan purchases can realise significant depreciation tax savings that are greater than those available on existing buildings if purchased for investment purposes. Depreciation expenses that can be claimed may include building, furniture and fittings.
• There is no guarantee what you are going to get. Fine print in contracts often allows developers to make changes.
• In some cases, there is no firm completion date.
• Delays in completion affecting expected timing in moving in can cause great inconvenience for those buyers on rental agreements.
• For higher density developments such as apartment towers, the valuation of your unit may fall if there is an oversupply of units for sale by investors at the time of completion.
• Some developers offer real estate agents high commissions which might artificially inflate your purchase price.
Exit clauses in your contract that are to the developer’s advantage.