Buying Property – Established Home, Off the Plan or New Build – Making the Best Choice

With the ‘new normal’ now feeling a little more stable, and the real estate market back to humming along, buying a property can definitely be back on your radar. First, check out our tips for new home buyers  to look at your budget and possible lenders. The next major decision is whether to buy an established property, buy ‘off the plan’ or look at building. There are advantages and risks for each option, so the decision needs to come back to what will work best for you and your family. As top property and conveyancing lawyers, we at Cahill Rowe Conveyancing have the legal expertise to talk you through the various benefits and help you mitigate any risks.

Buying an Established home

There are plenty of pros when it comes to buying an ‘old’ house. Buying an existing home gives you the freedom to choose an established neighbourhood that suits your needs and personal preferences. You can also literally pace out the house to get an on-the-ground feel for living there. Aesthetically, older homes can give you character and flair, reflecting the era of the build. Of course, ‘character’ can also come with downsides if it means draughty old windows, a lack of insulation or a build-up of moisture – these things need to be assessed by a trade professional with a Building Inspection.

*Think of a Building Inspection as a medical check-up for your potential purchase. A good inspection will give you the full story of the house and give you confidence in making a buying decision – is everything up to scratch or rectifiable with repairs or renovations, or should I look elsewhere?

When it comes to duty concessions for established properties, you may be eligible for the first-home buyer duty exemption (if the property is valued less than $600,000) or concession (if the property value lies between $600,000 and $750,000). Note that the Victorian Government has also announced a land transfer (stamp) duty waiver for purchases of Victorian residential properties with a dutiable value of up to $1 million, for contracts signed before 1 July 2021. For existing residential properties, a 25% land transfer duty waiver of the duty otherwise payable applies. This waiver applies after all other eligible benefits, such as the first home buyer duty concession, have been taken into account.

Buying Off the Plan

Buying a house ‘off the plan’ is like buying a little piece of the future: you are entering a contractual agreement with another party (the builder/developer) and relying heavily on the future execution of that contract (ie the successful build and delivery of your new home).

Purchasing off the plan can sometimes enable you to enter the property market at a lower price (although not always) and give you more time to save before settlement (buy now, pay later!), but remember that due to an oft-times extended period between purchase and settlement, your financial and personal circumstances may change, affecting your ability to obtain a loan. If you are considering an off-the-plan purchase, you must also be acutely aware that off-the-plan builds can be delayed and the delays are largely outside of your control (make sure you have somewhere to live in the meantime!).

When it comes to buying off the plan, the Contract of Sale and Section 32 disclosure document that accompanies it details both your responsibilities and the responsibilities of the seller – it is important that you understand your legal rights and obligations before signing this contract.  Talk to one of our knowledgeable property lawyers at Cahill Rowe Conveyancing to ensure you are protected and getting exactly what you expect from your purchase.

*Note: For first home buyers, duty concessions for off-the-plan purchases are the same as for established-home purchases: an exemption if the dutiable value of the property is valued at less than $600,000, and a concession if the dutiable value of the property value lies between $600,000 and $750,000.

*Tip:  An exact completion date is very rarely possible. You need to ensure that you are not relying on a specific date. Make plans to ensure you are not homeless! 

Buying a House and Land Package (or a ‘New Build’)

Oh the joy of a new home – one that you’ve ummed and ahhed over the inclusions, with all the mod cons and just the right amount of space. Choosing higher-quality materials at the planning stage means there’s less chance of your home requiring maintenance down the line, and choosing energy efficient options when building can save you thousands on electricity and gas bills in the future (as well as improving the value of your home). Of course you will need to factor in location restrictions – land may not be available in your first-choice suburb, for instance – and construction times (do you have somewhere to reside for the 26 weeks or more it may take from the beginning of the build to lock-up?).

Note that buying a house and land package is slightly different from buying an established home. You will start by paying your deposit and stamp duty on the land component, then you will need to take out two loans: one to purchase the block of land, and the second for construction.

It is always wise to have your property lawyer review your building contract prior to signing it. There are many contractual obligations imposed on an owner during the building stage. Do you understand them all?  

*Remember: The construction loan will be drawn down in stages and you only need to pay interest on the money as you use it.

The big pro when it comes to house and land packages and brand new builds is the opportunity to apply for the First Home Owner Grant. Alongside the duty concessions mentioned above, eligible first home buyers building a new home in Regional Victoria valued at up to $750,000 will receive a grant of $20,000. Furthermore, for new residential properties with a dutiable value of up to $1 million, a land transfer (stamp) duty waiver of 50% will be applicable for contracts signed before 1 July 2021.

*Peace of mind: A compulsory Builders Warranty in Victoria is designed to protect a new homeowner in a variety of situations. It is the contractor’s responsibility to ensure the house is free of non-structural defects for two years and any structural defects for six years after completion.

Contact Cahill Rowe Conveyancing

For further information on any type of property purchase, please contact us at Cahill Rowe Conveyancing on (03) 5292 1994 and we can help you, step by step, through the process.