Beware of display suites
Spacious, beautifully furnished and well-lit display units are not a representation of your finished off the plan apartment. The fine print of the contract will state that you cannot rely on what you see in a display suite. Rather, carefully check the plans for your chosen apartment as specified in the contract. Use a tape measure to measure it out. How does it compare to your current home? What is the orientation of the apartment? Will it have enough natural light? North-facing properties are always preferable.

Do not rely on rental guarantees
These can be provided by companies that are financially worthless or are wound up and closed by the time any purchaser may want to enforce a guarantee. Don’t rely on a rent guarantee. Instead, do your homework about the rental market in the area. What rent could you achieve if all or most of the apartments in the building were released onto the rental market at the same time? Always budget for conservative rent receipts.

Be wary of buying with an unconditional contract
Buy “subject to finance”. Sign a contract “subject to finance” being approved. Even if you have pre-approval to borrow up to a certain amount, the bank will still need to value the property before financing the purchase. Some small off the plan apartments can be very difficult to obtain finance for – generally anything under 40 square metres – and some greenfield estates can be valued very conservatively. Never assume finance will be approved for a property before the bank has conducted its valuation.

Keep a close eye on the sunset period
Even if the selling agent tells you it will be finished in one year, the contract’s “sunset clause” could be five years. Yes, the developer will want to finish as soon as possible, but could you wait the entire sunset period if you had to? Especially if the contract will prohibit you from reselling the property before settlement?

Know your rights
Know your rights regarding fixtures, changes and defects. The developer is entitled to substitute fixtures and fittings for items of similar quality. That’s why it’s important to specify brands for appliances and air-conditioning units. This way, you start with a benchmark and a clear expectation of quality. The developer is also permitted to change the size and design of the apartment to a minor extent. You must be notified of any changes and you can terminate the contract if anything significant occurs, such as the deletion of a car park or balcony, or major changes in a strata or owners corporation liability entitlement. When the property has been completed and settlement occurs, carefully inspect your apartment and notify the developer of any defects during the contractual period (commonly within three months of settlement).

Source: Article written by Kate Ashmor, the principal of her own Melbourne-based law firm, Ashmor Legal.