Buying new off the plan

Buying your new home off the planBuyers are embracing the state government’s property concessions.

More than $19 million in stamp duty concessions has been handed out to buyers of land and new houses and apartments since the state government introduced incentives to spur building activity.

Figures from the Office of State Revenue show that, as of late last month, 2191 Home Builders Bonus concessions had been granted across the state since the scheme began in July.

The managing director of CBRE Residential Projects, David Milton, says he’s already seeing a surge in inquiries among investors wanting one- and two-bedroom units in Sydney.

Across NSW, applicants for the scheme were fairly evenly split between the Sydney metropolitan area (1096 people) and the country (1095 applicants). In the country, most people (879) bought land. In the city, 563 people bought a unit, 396 land and 137 a house.

Milton says there is likely to be a lag in the official figures as buyers make their purchasing decision but do not apply for the stamp duty concession for several months.

A senior economist with the Housing Industry Association, Harley Dale, says that while the incentive might be creating some interest in off-the-plan developments, he thinks the reversal of a state government decision to cap developers’ fees for land for housing at $20,000 is having a negative impact on the new-housing industry.

In July and August, 5411 new dwellings were approved in NSW. Of the 3420 in Sydney, 40 per cent were houses and 60 per cent were apartments. This compares with apartments comprising 57 per cent of building approvals in Sydney in the 12 months before the incentive was introduced.

Figures from the Australian Bureau of Statistics show the total number of dwellings approved in NSW fell 16 per cent in August, after rising 9.7 per cent in July.

The national head of research at developer Stockland, Matthew Bell, says building activity in NSW has been at historically low levels in recent years. But he predicts NSW government incentives will create demand for new land and housing.

In Sydney, Bell says that’s likely to happen mostly in the west and south-west.

That said, “the threat of increased interest rates is likely to have a dampening effect on sentiment”.

If you are buying an apartment, house or land, you shouldn’t be lulled into a false sense of security because it is new, says building advisory service Archicentre.

The ACT and NSW state manager of Archicentre, Angus Kell, says it’s vital to pose plenty of questions.

He also says inspections are a must. There have been many cases of people buying, only to find out that what they got wasn’t quite what they were expecting.

“It’s like the car that they show you on the TV ad at night,” Kell says. “It is typically the top-of-the-range model, not the one that you’re actually going to buy.”

Research the properties planned around you – for example, will they be big homes that will steal your sunlight?

For apartments that have already been built, it’s vital to have inspections carried out. Inspections may pick up defects that you can ask the builder to remedy, or that will allow you to negotiate a discount.

Many major building defects don’t show up in the strata report that your lawyer or conveyancer will request as part of the purchase process. “People don’t want it there because they believe it devalues the price of the unit,” Kell says.

The savings
The Home Builders Bonus provides a full stamp duty exemption for vacant land and off-the-plan properties where building has not begun. A partial concession of 25 per cent applies where construction has started. There’s no limit to the number of new properties a person can buy but there is a cap of $400,000 for land and $600,000 per property for new houses and apartments.

The checks
When buying off the plan, research the history of the developer and builder and speak with owners of properties they have built.

* Check where in the building your unit will be.
* Understand the plans for nearby sites.
* Confirm fittings and finishes.
* When buying land, investigate the orientation.

“The typical thing would be that the display unit has got a beautiful north-facing backyard but the block of land that you’ve bought has a south-facing backyard,” says Kell.

Story by Carolyn Boyd,

Leave a Reply