Buying Off the Plan

Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.

Since the State Government released its Directions 2031 planning policy, local governments have grappled with planning their cities and towns in a manner that emphasises infill development rather than urban sprawl. This is no easy task (take, for example, the community reaction to the City of Cambridge’s planning policies) given our proclivity for a back yard of our own.

However, in-fill we must. Thankfully, there remains masses of underutilised land in and around the metropolitan area that make ideal higher density infill sites; closed schools, disused road reserves, failing small scale commercial centres, ex-industrial land, excessive recreational reserves, etc.

In-fill development is progressing and in and around Fremantle, it is progressing more rapidly than in other places. The eastern entry to the city, in particular, has several new apartment buildings either completed, nearing completion or available to buy off the plan. South Beach has plentiful apartment choices with more to come, Leighton Beach, North Fremantle’s “Taskers”, the old Kim Beazley school site and the Knutsford precinct are all under development.

These projects give buyers an opportunity to buy a property off the plan. When considering buying such a property it is worth being especially vigilant in ensuring the apartment you choose will turn out the way you expect it to upon completion. Usefully, most developers will provide some choices of finish and display material samples so buyers can touch and feel the quality of products to be used.

Developers normally require a proportion of “pre-sales” before the development commences in order to secure the funding necessary to commence the building. A buyer’s deposit and signed contract gives the financier the necessary comfort to lend the developer the money needed to complete the project. Sometimes, especially in slow markets, insufficient pre-sales means the development fails to progress. On other occasions, in a strong market, pre-sales are plentiful, building commences and two to three years later the developer expects settlement only to find the market has fallen, some buyers are unable to raise the settlement funds and legal ramifications follow.

The sale contracts for these off the plan purchases are substantial, prepared by lawyers on behalf of the developer and are relatively complex. It is essential that buyers, especially inexperienced first-home buyers, thoroughly read the contract before committing and obtain some independent advice if necessary. The selling agent is normally not able to advise you in this regard.

Given the need for greater infill development to counter urban sprawl, buying an off the plan apartment for either investment, down-sizing or first home buying reasons is a pretty sound idea.

by Hayden Groves
REIWA President
REIA Deputy President

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