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Frequently Asked Questions
Melissa Tsui

Why is Everyone Buying an Off the Plan Property?

Updated: Dec 15, 2021



What is an Off the Plan Property?


An off the plan property is a property that has not been built yet.


It is essentially a contract for a builder promising to build the property as per the terms of the contract.


Due to the government’s initiative to boost the building and construction industry to meet the housing needs of Sydney’s growing population, off the plan properties are becoming more popular.


Common Issues with Off the Plan Properties


However you should be wary of these common issues with off the plan properties:


  • Issues with the quality of the finishings and build

  • The actual property is smaller than what was promised in the contract

  • Issues with the structure of the build

  • Quick turnaround time from the builder giving notice and settlement date

  • Delayed settlement incurring high interest payments

  • Recent issues with combustible cladding

  • Issues caused by changes in the building code


You could be eligible for a full or partial exemption from stamp duty and special grants depending on your situation. Check the NSW Revenue website for more information.


Off the plan properties are popular with first home owners as many studio or 1 bedroom apartment units are sold as an off the plan property. If they meet the eligibility requirements and the property is under the threshold, the first home owner may be eligible for a full or partial exemption from stamp duty and a grant (if applicable). Due to the Sydney property prices, many parents provide a generous gift or loan to their young adult child in their first purchase and take up the opportunity of stamp duties exemptions or grants.


Due to the volume of contracts for an off the plan properties, many conveyancers/solicitors charge a higher fee. Some contracts can be as large as 2 large binder folders.


Most developers are reluctant to negotiate any terms in the contract. However you should try to negotiate the terms and instruct your conveyancer/solicitor to request amendments in the contract. Depending on the developer's response, you will need to assess the commercial benefit and the risks of any unfavourable terms in the contract against the purchaser.


A common complaint about off the plan properties is the poor finishes or build of the property and when the complaint is raised with the developer, the developer tries to rescind the contract. To put it simply, to rescind the contract means to put each party in their positions as if there was no contract. Many buyers feel cheated as they suspect developers rescind contracts as they believe they can now obtain a higher price for the property in the current Sydney market compared to the purchase price agreed to a couple of years ago. Unfortunately, purchasers are bound by the terms of the contract which are usually unfavourable to purchasers and favourable to developers. So under the terms of the contract, developers have been able to legally rescind the contracts and put the property back on the market to obtain a higher purchase price.


Therefore it is prudent for purchasers to obtain legal advice about the off the plan properties before signing the Contract.


There are constant changes in the law and building codes so it is important to do your research before buying an off the plan property. For instance, many new developments have used cladding which was approved under the Building Code at the time of built. However with recent changes in the Building Code, a review of cladding which was found to be combustible (similar to the cladding in the London Grenfell Tower fire tragedy) is now no longer an approved material to use in the cladding. Recent UK cases have shown that the Courts have ordered developers to strip already built new developments of the combustible cladding (which at the time of building was approved under the building code). The issue for developers and purchasers is that many already built new developments have problematic cladding. It is problematic to determine who bears the costs and responsibility for replacing the cladding. A few cases with this problem are currently being dealt with in the Supreme Court of NSW.


The above information is based on NSW properties.


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*** Disclaimer:

Information on this website or post does not constitute legal advice and that electronic dialogue with readers does not constitute any form of client engagement unless specifically agreed.

The information is provided on a general basis only. We strongly recommend that you seek your own independent advice from a lawyer about your situation.




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