Off Banner

Off the Plan purchase

Buying ‘off the plan’ typically means buying a property that is offered for sale before construction or Civil works have been completed. Off the plan purchases are common for units and apartments or vacant land, where a developer often does not even commence any civil works or building until a certain percentage of the development has been pre-sold.    

Buying off the plan can help purchasers lock in a price for their property in a rising property market – ideally the price agreed with the developer will be less than the property is worth when it is completed, and the buyer settles on the transaction with an instant increase in equity. This situation, of course, is subject to market volatility and, as we have seen, the ‘ideal situation’ does not always play out.


Buying off the plan has benefits, but there are also some potential pitfalls that buyers should be aware of when purchasing off the plan. Off the plan contracts are typically lengthy and complex with a range of provisions to look out for. Some of these include:

Sunset clause

A property bought off the plan may not be constructed on time (or at all). A developer may struggle to sell enough properties in a development, they may not be able to secure all necessary approvals, or it may not be financially viable to complete the project for various reasons. Most off the plan contracts will include a ‘sunset clause’, which allows the buyer to withdraw from the contract if the property is not constructed in a timely fashion.

At one time, unscrupulous developers in rising markets would use the sunset clause to end existing contracts so that they could resell the property for a higher price. A developer now needs a buyer’s consent before they end a contract using a sunset clause (or they need to apply to the NSW Supreme Court to justify the termination).


When buying off the plan, a buyer cannot physically inspect the property they agree to purchase. Their decision is based on a perception of the finished product and information gleaned from plans and specifications, schedules of finishes, marketing campaigns, and visiting display homes or other developments completed by the same developer. There is often leeway in an off the plan contract for the developer to make changes. These can range from the minor (such as slight changes to the property facade), to major changes that impact on the value and amenities of the property (such as deciding not to build promised facilities or blocking views from the property).

Falling values

It is possible that after an off the plan purchase is completed, the market falls. If this happens, not only will a buyer not have instant equity in the property, but they could experience difficulty with their finance because the property is no longer worth the price that was originally agreed.

Obtaining Finance

If you are purchasing an off the plan property and registration make not take place for say 2 or more years, your financial circumstances may change during that time and when it is time to obtain finance approval for your purchase of an off the plan property you may not be able to obtain the necessary finance and therefore not be able to complete your purchase.   You will then be in default and may lose your deposit and the Vendor can sue you for damages etc.

Payment of Stamp Duty

Payment of Stamp Duty is required in NSW within three (3) months from the date you exchange contracts or twelve (12) months if you are purchasing an off the plan and you intend to use the property as your prime residence.    But if you are purchasing the property as an Investment or you are Foreign Resident Stamp Duty is payable within three (3) months or on settlement (whichever is the earlier).

Therefore, you need to take this into consideration when purchasing off the plan and the length of the Sunset period as you will need to source the payment of Stamp Duty prior to settlement of your purchase taking place.  

Alternatively, you can delay payment of Stamp Duty until settlement, however, Revenue NSW will charge you interest on the payment of Stamp Duty from the date it was due and payable until the date you make payment.

Protections for purchasers

In New South Wales, vendors who sell a property off the plan must provide a disclosure statement that outlines key information, like sunset dates and other conditional events, and provide draft documents like a plan, proposed schedule of finishes, and draft by-laws.

Vendors must now notify purchasers when something they disclosed is no longer accurate in a way that could adversely affect the use or enjoyment of the lot. In some cases, where purchasers are materially prejudiced by a change to a material particular, they can pull out of the contract and get their deposit back. As an alternative, they may choose to settle the purchase but claim compensation for the change.

Cooling off period

Off the plan buyers have a standard 10-business day cooling off period. Purchasers can decide to pull out of the contract during the cooling off period, though they forfeit 0.25% of the purchase price.

The cooling off period can be waived or shortened, but only if the Purchaser’s Conveyancer provides a certificate required by legislation and explains the contract and the consequences of varying the cooling off period.

Buying into a strata scheme

Many off the plan purchases are for units in a strata scheme or mixed-use development. Property in a strata scheme is divided into lots and common property. The title of an individual lot (unit) is held by its owner, who also has a shared interest in the common property with other owners. Common property includes stairways, lifts, corridors, community gardens, and swimming pools, etc.

When you buy into a strata scheme you become part of the owners’ corporation which (through a committee) manages the common property and establishes an administrative fund for regular outgoings and maintenance, and a capital works fund for long-term or capital works. Your contribution to these funds is determined by the unit entitlement of your lot, as is the value of your vote at meetings.

An important feature of strata living is that essentially an owner is a member of a small community. The functioning of the owners’ corporation and the by-laws (which can be restrictive) play an important role in the enjoyment and daily operations of the strata complex and it is important to consider these matters carefully.

If you want peace of mind every step of the way for your next property transaction, contact [email protected] or call 02 9629 4800.