Buying a townhouse off the plan

Buying off the plan means signing a contract to buy a home before it’s built. Most new townhouse projects start selling this way, often months or years before completion.

How it works

Research the developer and builder. Look at projects they’ve finished and, if you can, visit one.
Have the contract reviewed. Ask a conveyancer or solicitor to check it before you sign, especially the plans and specifications, the completion or sunset date, and what the developer is allowed to change.
Pay the deposit. A deposit of around 10% is common, though some developers accept less or a deposit bond. It’s usually held in a trust account until settlement.
Wait for construction. Ask for regular updates and keep your finance plans current — your circumstances and the lending market can change before completion.
Inspect before settlement. Check the finished home against the contract and list any defects for the builder to fix.
Settle. Pay the balance and collect your keys. Your lender will usually value the home close to completion.

Sunset clauses

A sunset clause sets a date by which the home must be finished. If it isn’t, the contract can usually be ended. Several states have tightened the rules on when a developer can use a sunset clause to cancel a sale, so ask your conveyancer how it works in your state.

Stamp duty and grants

Some states offer stamp duty concessions for off-the-plan purchases or for first home buyers, and first home owner grants may apply to new homes. The rules differ by state and change often, so check with your state revenue office before you rely on them.

Questions to ask the developer

What’s the expected completion date, and what’s the sunset date?
Who is the builder, and what warranties apply?
What exactly is included — appliances, flooring, window coverings, landscaping?
What will the owners’ group fees be in the first year?
How many homes are in the project, and how many are sold?
Where is the deposit held, and can I use a deposit bond?

The trade-offs

Off the plan gives you time to save, a brand-new home, and sometimes stamp duty savings. The risks are delays, changes to the design or finishes, and a valuation at settlement that comes in below the price you agreed — which could mean finding the difference yourself. Buying a completed townhouse removes most of that uncertainty, because you can inspect exactly what you’re getting.

This is general information, not financial or legal advice. Get advice that suits your situation before you buy.