Purchase Property before Construction
The concept is that buy a real estate from the developer before construction starts. Usually this is new apartments or townhouse that will take between 1 and 3 years to complete. You are buying real estate at today's market price but you do not have to pay for it until the building is completed.
If you purchase at the right time in the property cycle, you can make good capital growth on your investment during construction. This can be a good strategy but you need good information and receive the right advice from our property consultants.
Advantages to Purchase New Property
You can save on Stamp Duty charges if the contract is exchanged before construction is commenced in both Victoria and NSW. For example, if you buy AUD$500,000 worth of real estate, you can save around AUD$20,000 on Stamp Duty. (rates vary)
When developers first offer their new products to the market they usually start with lower prices to encourage a faster sales. When the developer achieves his sales requirement for construction finance prices will usually rise. Investors who buy early, generally will buy at a lower price.
You are buying property at todays prices, but only paying 10% deposit till the project is completed, often in 2 years time. This is a big advantage in a rising market.
An advantage of purchasing new real estate (off-the-plan) is that there are a lot of apartments to choose from if you buy when the project is first launched. This gives you great choice to purchase the right investment.
Buying new real estate qualifies under the FIRB guidelines to allow non Australian residents to buy property in Australia.
With new real estate you can claim the maximum depreciation allowance in your your tax return, making it an attractive investment for investors with a high income.
If you are purchasing any real estate with Secure Growth Investments, you have access to all the information on our website and our full customer service.
When you purchase new real estate, you need to pay a deposit that is equal to 10% of the property price to exchange contracts. This is placed in a Trust Account until the project is completed at which time you pay the balance of the purchase price.
If the project fails to complete, your deposit should be fully refundable. Conditions for refund are in the contract.
Sunrise and Sunset Contract Clauses
A sunrise clause dictates the latest possible start date for the project. If there is no sunrise date, your money can be tied up for lengthy periods without construction commencing. Often developers need to achieve a certain percentage off the plan sales before the banks will release funds for the construction.
A sunset clause dictates the latest possible completion date. This is important if the developer runs out of money and cannot complete the project.
These contract clauses are important to protect your rights.
Because the project has not been built, you must read the building specification in the contract thoroughly prior to signing the contract.
Try to view a picture of the apartment or a similar apartment built by the same builder. Secure growth Investments will provide you with up to date information.