How to Buy Off the Plan in Australia: Pros, Cons, and What to Watch For

Buying off the plan means purchasing a property before it has been built — or while it is still under construction. You are essentially buying based on architectural plans, artist impressions, and a display suite rather than a finished product. Off-the-plan purchases are common across Australia, particularly for apartments and townhouses in major cities. While they can offer genuine financial advantages, they also carry risks that every buyer must understand before signing a contract.

What Does "Off the Plan" Mean?

When you buy off the plan, you enter into a contract of sale for a property that does not yet exist in its finished form. The developer uses your deposit (and the deposits of other buyers) to help finance construction. You agree to purchase the completed property at a price locked in at the time of signing, with settlement occurring once construction is finished and an occupation certificate has been issued.

The time between signing the contract and settlement can range from 12 months to 3 years or more, depending on the size and complexity of the development.

Advantages of Buying Off the Plan

There are several reasons buyers are drawn to off-the-plan purchases:

Stamp Duty Savings

In most Australian states, off-the-plan buyers receive stamp duty concessions. Because stamp duty is typically calculated on the value of the property at the time the contract is signed — when only the land component exists — the dutiable value can be significantly lower than the final purchase price. In NSW, VIC, and QLD, specific concessions or deferrals apply. Use our stamp duty calculator to estimate your savings.

Depreciation Benefits for Investors

A brand-new property attracts the highest depreciation deductions available under Australian tax law. Investors can claim depreciation on both the building (capital works at 2.5% per year for 40 years) and the fixtures and fittings (plant and equipment), which can substantially reduce taxable income in the early years of ownership.

Capital Growth During Construction

If the property market rises during the construction period, your property may be worth more at settlement than the price you agreed to pay. This means you could have instant equity on completion — though the reverse is also possible if the market falls.

Customisation

Many developers allow off-the-plan buyers to choose finishes, colour schemes, and sometimes layout modifications. Buying early in the sales process usually gives you the widest range of choices and the best selection of apartments (such as higher floors, preferred aspects, or corner units).

Risks and Disadvantages

Off-the-plan purchases carry risks that do not exist with established property. Understanding these risks is essential before committing.

Completion Delays

Construction projects are frequently delayed. Weather, supply chain issues, labour shortages, council approvals, and financing problems can push completion dates back by months or even years. While contracts typically include estimated completion dates, these are rarely guaranteed. A significant delay can disrupt your financial plans, especially if you need to continue renting or if your loan pre-approval expires.

Quality Differences from the Display

The finished product may not match the display suite or marketing materials. Display suites are often built to a higher standard, use upgraded finishes, and incorporate clever staging to make spaces feel larger. The actual apartment you receive may have lower-quality fittings, different materials (where the contract allows substitutions of "equivalent quality"), or a layout that feels different from what you expected.

Developer Insolvency

If the developer goes into administration or liquidation before completing the project, buyers face a difficult situation. While deposits are usually held in trust and should be recoverable, the process can be lengthy and stressful. In worst-case scenarios, the project may be abandoned entirely or taken over by another developer who changes the scope or timeline.

Market Changes

The property market can move significantly during a 2-3 year construction period. If values fall, your property may be worth less at settlement than the contract price. This can also create problems with finance — if the lender's valuation at settlement comes in below the purchase price, you may need to fund the shortfall from your own savings or risk being unable to settle.

Understanding Sunset Clauses

A sunset clause is a provision in off-the-plan contracts that allows either party to rescind the contract if the development is not completed by a specified date. Originally designed to protect buyers from indefinite delays, sunset clauses have been controversial because some developers have used them to cancel contracts when property values have risen — allowing them to resell at a higher price.

Legislation in NSW and VIC now restricts developers from triggering sunset clauses without the buyer's consent or a court order. However, the rules vary by state, so it is essential to have your conveyancer explain exactly how the sunset clause in your contract works and what protections you have.

Deposit Structure

Off-the-plan deposits are usually 10% of the purchase price, though some developers offer flexible deposit structures (such as 5% on exchange and 5% at a later milestone). Key points about deposits:

• Deposits must be held in a trust account until settlement — the developer cannot use your deposit to fund construction (in most states)
• If the contract is rescinded (e.g., under the sunset clause or cooling-off period), your deposit should be returned in full
• Some developers offer deposit bonds as an alternative to cash deposits — these are essentially a guarantee from a financial institution that the deposit will be paid at settlement
• Interest earned on deposits held in trust varies by state and contract terms — check whether you or the developer is entitled to the interest

Contract Review Essentials

Off-the-plan contracts are substantially more complex than standard property contracts. Having your solicitor or conveyancer review the contract is not optional — it is critical. Key areas to scrutinise include:

For more on spotting problematic clauses, see our guide to property contract red flags.

Defect Periods and Rectification

After settlement, new properties are covered by a defect liability period during which the developer is responsible for rectifying any defects in the building work. The statutory warranty periods vary by state:

• NSW: 2 years for minor defects, 6 years for major defects (under the Home Building Act 1989)
• VIC: Generally 6 years under the Domestic Building Contracts Act 1995
• QLD: 6 years and 6 months under the Queensland Building and Construction Commission Act 1991

Document any defects as soon as you take possession. Photograph everything, report issues to the developer in writing, and keep copies of all correspondence. If the developer is unresponsive, your state's building authority or tribunal can assist.

What to Check Before Committing

Before signing an off-the-plan contract, work through this checklist:

For a broader view of new-build considerations, see our guide to building a new home.

This article provides general information only and is not legal or financial advice. Always seek professional advice tailored to your specific circumstances before making property purchasing decisions.