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Pros and cons of buying a property off the plan in Victoria and Australia
Incentives exist to encourage off-the-plan purchases in Victoria, but it’s important you understand the risks involved, as well as how you can mitigate them.
On paper, the perks of buying property "off the plan" seem pretty clear. Not only do you get a brand new (and potentially customised) new home, but in many cases you'll also pay significantly less stamp duty on it too.
But buying an off-the-plan home isn't without risks, the most obvious being you're committing to buy a property that doesn't yet exist.
Here's what buying off the plan means, how it works, tips for buying and the key advantages and disadvantages to this method of buying property.
In this article
What does buying 'off the plan' mean?
Buying a property ‘off the plan’ means you’re buying a property before it’s been completed. The construction may or may not have started when you sign the contract of sale.
The practice is called ‘buying off the plan’ because you are purchasing the property based off its plans – that is, you’re agreeing to buy it before you’re able to walk through and inspect the finished product.
How buying off the plan works
1. Decide on the property
Choosing an off-the-plan property is a lot more than just selecting the home with the prettiest artist impression.
Because you can’t physically view the property you’re buying, it’s crucial you do in-depth research before committing. Consider the following when buying an off-the-plan property:
- The builder and developer - how many properties have they built, do they complete them on time, have they ever been involved in any complaints or disciplinary action?
- Location - is the area likely to increase in value, are there any other planned developments that could impact yours? If the development is on a major road or train line, what noise mitigation strategies are the builders putting in place?
- Practical liveability - it can be hard to visualise how much light a property might have, how functional its floorplan will be or how much storage it will have from plans alone. Things like whether the bedroom can comfortably fit beds, the number and arrangement of powerpoints and the location of plumbing fixtures can greatly impact your enjoyment of your home. Request more in-depth plans where possible and ask whether amendments are possible.
- Transport access - does the property include off-street parking? Is there a car stacker, underground carpark, shared driveway or separate driveways? Will there be EV charging infrastructure? Are you close to public transport or can you walk or cycle to shops, schools and work?
- Energy efficiency - what will the building's energy efficiency be and what measures are being enacted to create this? Will a solar PV (panel) system be installed in the build or will you be able to do this yourself after the fact (not all smaller homes can support solar PV systems).
- Strata arrangements - townhouses, duplexes, units and apartments are generally all under strata arrangements. Factor in any fees pertaining to this when making an off-the-plan purchase. Typically strata buildings with more amenities (lifts, carparks, pools, gyms) will have higher fees than those with basic facilities.
- Privacy - will people on the street be able to see into your home? What measures are included in the build (blinds, curtains, landscaping etc) that could prevent this? Are there future developments that could impinge on your property?
2. Review the contract and pay the deposit
Review the contract carefully before signing. This should include (if important to you) reviewing any clauses related to engaging an independent property inspector and their ability to conduct stage inspections throughout the build. Consumer Affairs Victoria also recommends you seek independent legal advice and have the property completion date listed in writing before signing.
Once the contract is signed you’ll need to pay the deposit. This should be no more than 10 per cent of the contract price.
3. Wait as construction is completed
The ‘sunset date’ set out in your contract is the date by which the developer or builder is required to complete construction. If they do not complete the project by this date then the buyer is entitled to walk away from the contract and receive their deposit back in full.
Make sure you understand the contract's sunset date (and any relevant clauses pertaining to it) before signing. House and townhouse builds often take between 12-18 months to finish, while apartments can take several years (especially for large complexes).
Having stage inspections carried out by a professional building inspector during construction can help identify and resolve certain building issues at an early stage.
4. Settle and move in
Settlement is the process by which you pay the remaining funds owing on the property (whether buying outright or with a mortgage) and the title of the property legally passes to you.
Off-the-plan properties (as well as all new builds) can benefit from a pre-settlement, handover inspection by a professional building inspector. Handover inspections are available for all residential property types (including apartments) and can help identify minor visual defects and quality of construction.
There can be significant reductions to the stamp duty owing when purchasing an off-the-plan property in Victoria, making them attractive to first-time buyers.
Pros of buying off the plan
Your home is brand new
One of the biggest advantages of off-the-plan properties is that you get a brand new, never-before-lived-in home that you can make your own.
Depending on the property and builder, you may be able to customise your off-the-plan home’s colour palette, fixtures, appliances and sometimes even layout.
Better energy efficiency
New homes are also more likely to be more energy efficient. For example, homes built in Victoria since May 2024 must achieve at least a 7-star thermal efficiency rating (out of a possible 10 stars).
This can help you save when heating and cooling your home, as well as when using appliances.
Read more: How to increase energy efficiency at home.
Time to save
While the total amount of your off-the-plan property is agreed to when you sign the contract, you’ll only pay the deposit (10 per cent or less of the contract price) before settlement.
This can give you time to increase your savings towards the purchase price or seek finance.
Stamp duty savings
It’s possible to get an exemption or concession on land transfer duty (i.e. stamp duty) when buying an off-the-plan property in Victoria. See below for more information on stamp duty concessions in Victoria.
What is the off-the-plan duty concession in Victoria?
Off-the-plan properties in Victoria can access a concession on their dutiable value.
With existing buildings, the dutiable value is typically the amount you pay for the property. For example, an existing home bought for $700,000 has a dutiable value of $700,000.
However, the off-the-plan duty concession works by subtracting any construction costs that occurred after you signed the contract for a property bought off-the-plan.
For example, a townhouse is bought off-the-plan for $700,000. The contract of sale is signed before any construction starts. Later, the builder informs the purchaser that construction will account for $450,000 of the townhouse’s total contract price.
The dutiable value can be calculated by subtracting the construction costs ($450,000) from the contract price of the home ($700,000), resulting in a dutiable value of $250,000.
If you signed the contract after construction commenced, your concession will reflect the amount of construction completed at the time of signing.
Once you’ve worked out your dutiable value, you can then apply additional concessions (if applicable) like the first home buyer duty exemption or concession or the principal place of residence concession.
A conveyancer or solicitor can advise you further on the stamp duty concession you could access – further eligibility criteria can be found on the Victorian State Revenue Office website.
Some off-the-plan properties allow buyers to customised their home in terms of colour schemes, floorplans and fixtures.
Cons of buying off the plan
Uncertainty over the final product
Buying off-the-plan means you can never be certain over the final product. Variations can occur in the materials, finishes (e.g. paint colours), quality of construction and even floor plans.
For off-the-plan houses, duplexes and townhouses, having stage inspections carried out by an experienced building inspector can help keep you abreast of the build and visually identify potential areas of concern.
Read more: The most common issues in new home builds.
Construction delays
Supply chain issues, labour shortages and bad weather are just some of the problems that can cause building delays.
An experienced, reliable builder will often account for these when setting out the sunset date (that is, the date by which the property should be finished). Still, it can be prudent to allow a reasonable amount of leeway on top of that.
Market fluctuations
The price of your home is locked in once you sign the contract, but property values and interest rates are not.
Falling house prices may mean your final property is worth less than you bought it for, while rising interest rates can mean your finance repayments are higher than expected.
Keep in mind that fluctuations can work in your favour too, should interest rates drop or house prices rise.
Financing challenges
If you’re engaging a lender to finance your home it’s often best to speak to them as soon as you begin considering off-the-plan properties.
This is because some lenders regard off-the-plan properties as potentially riskier investments than established homes, simply because they do not yet exist. Consequently, lending criteria may be stricter.
Tips for buying a property off the plan
Do your research
Complete thorough research into all parties involved in the construction of the off-the-plan property you’re interested in. This includes,
- The developer
- The builder
- The architect
Research their names online to see if they’ve been reported to the Building and Plumbing Commission or involved in any negative media coverage. Where possible, inspect other properties they’ve built or speak with the people who bought their past homes to get insight on their experience.
Get professional legal advice
Enlist the services of a conveyancer or solicitor experienced in off-the-plan properties. They’ll be able to explain the contract to you in plain language, as well as outline the sunset date and clause, obligations pertaining to you and the developer, penalties and more. They can also help adjust the contract to better protect your interests.
Review your property’s plans
Carefully review the final plans for your off-the-plan property, including the floorplan, finishes and any inclusions. Make sure you keep a copy of this in writing and know what pathways are available to you should these plans not come to fruition.
Never be afraid to ask questions of the developer. Check if more detailed plans are available than what is provided in the contract or marketing materials and whether changes are possible if desired. At the end of the day, it’s your money and home on the line, so be proactive in communicating your interests.
Plan your finances
Speak to lenders to assess finance options prior to signing a contract. Make sure you understand their lending approval processes, including what happens if the project finishes ahead of schedule or if the resulting home is valued below the contract price.
Finance is unlikely to be fully approved prior to the property being built and valued. Your lender may provide pre-approval before this, but as pre-approval generally lasts only three to six months, you may need to reapply if there are construction delays.
Also factor in how you will be supporting yourself while your home is being built (for example, renting) and have funds to continue supporting yourself if delays occur.
Calculate ongoing costs
Many, but not all, off-the-plan developments fall under a strata arrangement. This typically applies to apartments, units, townhouses and duplexes where there are shared features or amenities such as roofs, walls, driveways, elevators or carparks.
If you buy a strata property off-the-plan, keep in mind you’ll have ongoing owners corporation costs for building insurance and/or the upkeep of shared facilities. These are in addition to council rates. Special levies can also occur if repairs are needed in the future.
Make sure the developer and builder of your off-the-plan property has a proven track record of completing their projects on time and to code.
Yes, you can get a experienced building inspection for properties bought off the plan. These should be arranged independent from the builder through a licensed building and pest inspection business.
Be sure to review and understand any clauses related to engaging an independent property inspector prior to signing your contract.
Off-the-plan houses, duplexes and townhouses can typically access stage inspections, which consist of four or more inspections carried out at key stages of the build, including a final inspection before settlement and handover.
Off-the-plan apartments can access a handover inspection prior to settlement and you taking ownership.
Yes, first home buyers can purchase off-the-plan properties. They can also access grants and concessions that can be applied to off-the-plan properties.
Sometimes. Where eligibility criteria is met, the off-the-plan stamp duty concession in conjunction with the first home owner’s duty exemption can reduce stamp duty owing to zero.
Under this scheme homes with a dutiable value up to $600,000 pay no stamp duty, while those between $600,000 and $750,000 receive a concession.
Non-first home buyers who are buying an off-the-plan property to use as their principal place of residence can also access a stamp duty concession on properties with a dutiable value up to $550,000.
Changes were proposed to negative gearing in the 2026 Australian Federal Budget.
These changes include limiting negative gearing for residential property investments to new builds from July 1, 2027.
An off-the-plan residential property bought as an investment would be classified as a new build, and therefore you may be able to access the benefits of negative gearing.
Yes, variations can occur in everything from the floorplan to colour scheme and appliance brands. Ensure you and your legal representative read the contract thoroughly before signing so you understand the builder’s obligations to you if this occurs.
