In recent days we have read in the press the failure of several property developers across the eastern states.
Recent press reports of failed developers across the eastern states may have our clients reconsidering a purchase off the plan as means of fulfilling the evolving needs of their home maybe reassessing the merits of such a strategy.
All decisions relating to investing capital involves some risk. We wanted to spend a few moments explaining why purchasing off the plan is still a home fulfilment strategy worthy of consideration and how Ray White Lower North Shore Group mitigates the likelihood of risks arising on residential projects on behalf of our clients.
Stamp duty is a necessary downside of property purchases, and has to be paid on all purchase contracts. However, most state governments offer savings on stamp duty for the purchase of new properties, as an incentive to help drive the construction and housing industries.
Stamp Duty is payable 3 months after signing the contract, however there is the ability to defer by a further 12 months if it is owner-occupied.
There will be zero maintenance for the immediate future. Buying off the plan means everything is brand new, not only the property itself, but fixtures, fittings and any appliances such as kitchen and bathroom items. As well as maintenance, buying off the plan means you can choose your interior styling not incurring any further interior refurbishment or styling costs.
One of the biggest financial advantages of buying off the plan is requiring only an upfront deposit of 10%. This makes it much easier to step onto the property ladder or secure your next home that’s more suitable to the evolving needs of your family and lifestyle. This allows you to save and arrange finance over the remainder of the time it takes to finish the residential project.
Of course, there are risks in any investment decision. Ray White Lower North Shore Group uses our market knowledge, experience, reputation and ethical standards to minimize the likelihood of these risks from materialising.
Like all reputable market participants, community trust in our reputation is central to our long term success. With a 20 year market presence and a genuine ambition for a further 20 years of delivering high-quality outcomes that our Buyers expect from us, we only partner with lenders, builders, developers, architects and engineers that have a reputable industry reputation for funding and delivering high-quality properties within a well-managed risk management framework.
Our clients who seek to purchase in the Lower North Shore are prepared to pay a reasonable premium with an expectation of receiving a high-quality property bespoke to their tastes, comforts and needs. This is typical of boutique, low rise developments in the Lower North Shore. We allow buyers to have some input into the design process to ensure their property needs are fully met.
In the unlikely event that a development fails or a participant is unable to fulfil their obligations, our client’s deposits our protected. We fulfil our fiduciary obligations to our deposit holders by keeping their deposits in a trust structure that is kept separate to developers and builders.
We place a paramount emphasis on the protection of our client’s interests and aspirations ensuring all contracts and documentation are fully disclosed and transparent reducing the risk of information asymmetry or adverse selection by the Buyer. In other words, we bend over backwards to ensure that our clients decision to invest in an off the plan project is well-informed and compliant to all relevant legal obligations and meets the community’s standard of ethical behaviour.
At the end of the day, residential projects across the Lower North Shore is driven by a market that has a low tolerance for poor quality outcomes, are unforgiving to market participants that under deliver in terms of value, quality and risk management and have a high expectation of finishes and schedules that are appropriate to the Lower North Shore standard of living and urban design and rightly so.
We sweat the small stuff on behalf of our clients ensuring the likelihood of any material risk impacting any involvement with an off the plan project is mitigated and our clients hard earned investment is quarantined.
In light of recent construction related issues, most North Shore developments are 3-5 storeys, not the high-rise style developments that have recently been mentioned in the media.
The banks financing the developers are extremely stringent and only developers with a lot of experience and builders with a history of good work and a solid finance sheets are acceptable to the lender.