There are many compelling reasons to get in early and purchase off the plan. It certainly puts you ahead of the competition and gives you the opportunity to own a brand new property, which is built to the latest building code. If you’ve been deliberating over whether or not buying an off the plan property is the right strategy for you, then consider these five benefits.
1. Lower deposit
When buying an off the plan property, generally only a 10 percent deposit is required. The remainder is only due on the settlement date, which could be anything from 9 - 18 months away. The deposit is generally placed into a trust account, so it is important to ensure the agreement is structured in a way that any interest goes to you, the buyer, and not the developer.
2. Secure a property at the current market value
The extended amount of time allotted between paying the deposit and settlement, means that buyers have the opportunity to save more and reduce the final amount they’ll have to borrow. In a booming market, buyers may find that a property has gone up in value in the time taken for it to be built. The opposite is also true, which is why serious investors see property as a long term investment strategy.
3. Lower maintenance
You’ll spend very little on maintenance for the first few years, purely because everything is new and under guarantee. That said, you'll want to make sure the property is covered by a ten-year builder's guarantee. These guarantees protect against building defects and generally come standard when you sign a contract with an accredited tradesman. If the property is sold within the ten-year period, the guarantee can be transferred to the next homeowner.
3. Tax benefits
As you are no doubt aware, owning a rental property allows you to claim back certain tax deductions. These tax breaks are more generous when it comes to newly built properties because the rate of depreciation is going higher - and this can be claimed back.
4. Opportunity to negotiate
Before builders start working on the project, they’re eager to sell their properties because they need to acquire the necessary cash flow from lending institutions to finance the project. You can use this to your advantage to negotiate a good purchase price - especially if you get in early.
5. Tenants want new properties
New builds are more attractive to tenants, which is another good reason to consider buying an off the plan property. In addition to this, by the time the settlement date arrives, rent prices are likely to have risen, which means you'll be able to offset the purchase price of the property against a higher rental return.
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