What Does Buying Off the Plan Mean? A Beginner’s Guide

April 10, 2025

Whether you’re entering the property market as a first-time buyer or looking for an investment opportunity, you must have come across the term “buying off-the-plan”. Based on architectural plans and designs, you enter into an agreement with a developer and start the purchase process before the property is complete.

The Canberra real estate market has new opportunities for people interested in off-the-plan properties. With new builds in the CBD and the surrounding areas, there is a steadily growing market for all property buyers. If you’re looking to buy an off the plan Canberra property, read our blog for some practical tips.

What Does It Mean To Buy Off The Plan Property?

Off The Plan Definition: Buying off-the-plan means purchasing a house or unit before it is built. You enter into a contract with the developer when the property is under construction or in some cases, even before construction has started. You decide to purchase the unit based on the building plans, architectural designs and renders.

How Does Buying Off the Plan Work?

The Process

1. Selecting Your Property

Start by looking for developments that match your budget, location, and preferences. Study the project’s floor plans, renders and timelines. Make sure the features, finishes, and amenities align with your expectations.

The selection process also includes researching the developer as much as you research the property. Look online and find the developer’s past projects. Speak to a real estate agent about the developer and try to find details of their other projects. A real estate agent, like the team at Independent Property Group, can help you judge the project’s viability. Look for any issues with previous developments, both during the sale or after completion. If the developer has been in business for a long time, visit their other developments to see how they’re holding up after a few years.

The last part of the selection process is to research the location and the area’s growth potential. This means looking into population growth forecasts, local infrastructure and facilities, public transport connections, and expected rental returns. If you don’t know how to do this research, consult local real estate agents in Canberra.

2. Securing Your Property

Once you have found a unit you’re interested in, it’s time to prepare yourself financially and secure your property. Obtain pre-approval from a bank or lender for your home loan.

Tip: Some banks may have different terms for off the plan homes, so clarify this in advance.

At the time of securing your property, you will sign a contract, which sets out the terms and includes the mention of a cooling-off period. Consult a lawyer before you sign the contract. Make sure it has a condition stating that the deposit will be returned if the project or construction fails.

You are required to pay a deposit when you sign the contract until the time construction is complete. In regular property purchases, you need to allow for a higher deposit amount (about 20%) upfront. Off-the-plan purchases allow you a little more flexibility with when you pay your deposit. Saving for your deposit is an important part of your financial planning.

The balance is due on settlement. This allows buyers more time to save. Speak with a real estate agent or mortgage broker to understand all the legal and financial aspects, along with any additional costs you need to budget for.

3. Construction Phase

Understand the timeline and stages of development. Keep an eye on the project’s progress, construction updates, and any delays.

4. Settlement

Once the property is completed, inspect it thoroughly to ensure it matches what has been agreed to in your contract. Complete settlement when the property is ready for occupation or transfer of title. Pay attention to any ongoing developer warranties or maintenance requirements.

Customising Your Home

When purchasing off plan properties, buyers can enjoy a range of customisation options, which can include selecting finishes, layouts, and even fixtures. You may even be able to choose elements like flooring materials, paint colours, and cabinetry designs. By personalising your space, you can ensure your home truly aligns with your taste.

Benefits of Buying Off the Plan

Potential Capital Growth

Buying off the plan offers the opportunity for property value appreciation during the construction period. Construction can span several years, and during this time, surrounding infrastructure improvements and market trends can increase the property's value, even before it is completed. This allows you to purchase at a price today and potentially sell for a higher price after the development is finished.

Government Concessions

As of 31 March 2025, the ACT government has different schemes to help home buyers. For the latest and most updated information on government concessions, refer to the home buyer assistance information from the ACT Revenue Office.

Home buyers purchasing an off the plan property (like apartments or townhouses) are eligible for duty exemptions based on the value of the unit.
Depending on the property and your eligibility, the Home Buyer Concession Scheme (HBCS) helps people by removing or reducing duty on the property they want to buy.
The ACT government is reducing rates of stamp duty for residential properties. From 1 July 2024, duty on owner-occupier purchases up to a certain amount will be at a lower rate, making it easier for first-time home buyers to buy property.
The ACT government also supports adults with long-term or permanent disabilities by providing the Disability Duty Concession Scheme (DDCS). Adults with disabilities acquiring a property as their primary residence are eligible for a concession.

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Depreciation Benefits

One of the major advantages of purchasing off the plan is the potential for depreciation benefits. Investors can claim depreciation on fixtures, fittings, appliances, and even on the building. This can reduce taxable income and improve after-tax cash flow. If you’re buying an investment property, this can improve the financial viability of your investment, providing ongoing savings each year. Buyers should consult with a financial advisor to understand how to maximise these benefits.

Modern Amenities

Off-the-plan properties are up-to-date with the most current standards. It’s likely that an off-the-plan property will feature energy-efficient appliances, contemporary designs, and sustainable building materials. These features enhance the living experience and add long-term value to the property.

Risks and Considerations

While off the plan homes come with substantial benefits, there are also some risks:

Price Fluctuations

With an off plan property, you decide on a fixed price. There is a risk of property value decreasing between purchase and completion. This leaves you vulnerable to market fluctuations.

Construction Delays

Potential postponements in the construction can affect the expected move-in date. Due to factors out of your control, settlement may not happen when expected. This uncertainty can cause anxiety among property buyers.

Changes in Personal Financial Situation

With off-the-plan purchases, it is important to maintain financial stability throughout the construction period. This is an added pressure throughout the construction process.

Developer Credibility

It is necessary to research the developer's track record and reputation. This credibility can change with the progress of other projects.

Legal and Financial Aspects

Understanding the Contract

Carefully review the contract terms before committing. Pay special attention to sunset clauses, which define the timeframe for the property to be completed. Be aware of potential additional costs, such as unexpected fees or charges during the process. Get professional help from a lawyer.

Financing Options:

Discuss mortgage pre-approval and compare lender options. Off-the-plan purchases may come with special financing conditions which could impact your loan. Lenders may assess the property’s projected value, rather than the purchase price. Additionally, some banks may require a higher deposit or impose stricter lending criteria due to the time between signing the contract and taking possession of the property. Early mortgage planning ensures smooth financing when the property is ready for settlement.

Tips for Prospective Buyers

When buying off-the-plan properties, there are some differences between first-time home buyers and investment buyers. While both groups should read and understand their contracts, get the right legal, financial, and construction advice, and learn about maintenance and warranties post-moving in, here are some additional tips:

First-Time Home Buyers:

Investment Buyers:

Understand the Timeline: Off-the-plan properties may take years to complete, so ensure you’re ready to wait.
Inspect the Floorplan: Confirm that the property layout and dimensions work for your needs. You can even visit display suites if the developer offers them.
Check for Hidden Costs: Beyond the purchase price, consider ongoing costs like strata management fees and body corporate fees.
Get a Fixed-Price Contract: Ensure that the price is locked in, so it won’t change during construction. This protects you from unexpected cost increases.
Look at the Deposit Structure: Understand the deposit requirements, which could be staggered over the construction period.
Stay Informed: Keep abreast of construction progress and maintain regular communication with the selling agent.

Know your Location: Research historical property growth trends in the area. Choose locations with expected demand in the long term.
Look for Good Rent Returns: Assess the property’s potential rental yield. Speak to property managers about tenant demand in the area.
Consider the Property’s Resale Value: Even though you’re buying for investment purposes, ensure the property can be easily resold in the future if necessary. Consider factors like size, layout, and location.
Understand Strata Fees: Off-the-plan properties can come with ongoing body corporate fees, which can impact rental yields.
Watch Out for Market Fluctuations: Property values can change during the construction period. Keep an eye on market trends.
Tax Benefits: Take advantage of any tax benefits available, such as depreciation claims.

Conclusion

Purchasing an off plan property can offer numerous advantages, but it is crucial to understand and prepare for the risks. Weighing the pros and cons will help you make an informed decision. Whether you are a first-time homebuyer or an investor, ensure you fully understand the contract, explore financing options, and stay informed about the project. To explore or buy an off plan property in Canberra, get in touch with Independent Property Group.