Considering buying property off the plan? Here are six crucial steps to protect yourself

There are six critical steps purchasers must follow to protect themselves in buying their homes off the plan.
Couple Holding Blueprint of a House

Buying property is the largest personal investment decision most Australians will ever make.

With pricing for standalone houses rising dramatically in many capital cities, more people are looking to buy apartments.

Buying an off-the-plan apartment can be one way to enter the property market.

Buying off the plan means consumers commit to buying a property, at today’s prices, before it’s built.

Settlement happens once construction is finished.

This approach comes with risks and challenges, but following six key steps can help consumers protect themselves.

Three key challenges

If you’re an off-the-plan apartment buyer, you face three key challenges.

First, consumers are subject to quite biased and complex sales contracts that favour developers. This puts purchasers into an unequal bargaining position.

Secondly, many consumers are unaware of the property rights and obligations that arise from purchasing a strata title property.

Strata titling enables individual ownership of a lot (such as apartment) as well as shared ownership of the common property (such as the lobby, garages, driveways and gardens).

Lot owners are legislatively required to be involved in co-operatively managing and maintaining their apartment complexes with their fellow lot owners.

Thirdly, some consumers have ended-up receiving a poor-quality product with building defects.

Our research reveals there’s room for improvement

We recently completed a research project examining the importance of information disclosure requirements of off-the-plan apartment sales contracts.


  • Reviewed information disclosure requirements in a number of industries, to get a sense of what’s standard, and compared that with information disclosure requirements involved in off-the-plan purchases
  • Conducted in-depth interviews with 31 industry practitioners and stakeholders from around Australia, including lawyers, property developers, real estate agents, policy managers, consumer policy advocates and off-the-plan apartment buyers
  • Did an online survey of 512 off-the-plan residential apartment buyers.

We found opportunities to improve the system, and outlined recommendations for key stakeholders:

Opportunities to improve ‘off the plan’ house and apartment buying

For buyers
  • Evaluate the credibility of the builder
  • Obtain independent legal advice on contract documents
  • Understand the rights and obligations associated with community living
  • Consider an independent building inspection
  • Know where to seek assistance.
For developers
  • Improve communication with buyers
  • Contribute to the cost of government oversight of the housing sector
  • Increase accountability in forecasting of sinking funds
  • Create better relationship between what buyers want and what is offered
  • Build better quality buildings.
For lawyers
  • Develop responsive, dynamic contracts with standardised requirements
  • Create a standard “off the plan” sales contract with the assistance of law societies
  • Propose a mechanism to certify consumer comprehension as part of the sales contracting process.
For agents
  • Be accountable for clearly articulating to buyers who you are acting on behalf of and receiving a financial benefit from
  • Establish interactive online platforms to engage customers
  • Provide sufficient information in the early stages
  • Use digital representations of buildings to give buyers an understanding of what they’re considering
  • Use techniques such as choice modelling to learn consumer preferences and co-design information disclosure.
For policy makers and regulators
  • Establish government oversight or ombudsman service for the housing sector
  • Consider data integration and streamlining of processes
  • Implement effective government intervention to ensure that bodies corporate and lot owners are receiving the necessary information
  • Integrate financial and contract literacy within school curriculum
  • Develop online training on community living
  • Understand buyers’ journeys and integrate consumer behavioural insights into policy reviews and reforms
  • Guide consumers to get certification from lawyers
  • Impose penalties or a greater degree of positive obligations through law reform
  • Strengthen the “unfair contract” provisions in Australian Consumer Law.

Source: Author provided
Images: Wes Mountain/The Conversation CC-BY-ND

We found most off-the-plan apartment buyers in Australia are typically “mum and dad” investors, but a growing proportion are owner-occupiers.

Off-the-plan buyers tend to be mid- to high-income earners, well educated, working in professional or managerial roles, and between the ages of 20 and 44.

About 46 per cent of off-the-plan buyers are Australian couples with dependent children.

Nearly 69 per cent of buyers were born in Australia. This contradicts a widely held perception that most off-the-plan apartment buyers are overseas investors.

Systemic change is needed

Our findings indicate there is limited consumer protection through regulations when buying off-the-plan apartments.

Consumers need to educate themselves, effectively engage in the purchasing process, and make sure they’re making informed decisions.

However, no amount of disclosure will cure problems built into the system, such as a lack of accountability, the discretion of developers and poor-quality products.

Specifically, consumers need to be protected from features within these contracts that are inherently harmful.

These include the ability for the developer to cancel the contract, change the plan or floor structure, or include financial clauses that make it hard for a buyer to get their deposit back.

The purchaser may not have the financial literacy skills needed to understand the true cost of the fees associated with the property, relying on the developer to disclose this.

Policy change is needed to better protect buyers and put the onus on developers to make contract features such as these much clearer.

There is a glaring lack of government oversight of property contracts and the housing sector more broadly.

In other sectors, such as purchasers contracting for consumer goods (such as mobile phones, whitegoods, insurance) there are distinct and clear roles for government oversight, accountability and consumer protection for non-compliance.

For example, if you buy a fridge and it turns out to be faulty, the seller has to replace it or refund your money.

But there’s no such legal protection in many off-the-plan contracts. Instead, the onus is on buyers to take the developer to court.

And many buyers may not be keen to terminate an off-the-plan sales contract because they have already invested emotionally in the lifestyle “dream” of living in a complex with features such as a pool, a gym and so on (without fully understanding what strata fees usually come with them).

Six steps to protect yourself

There are six critical steps purchasers must follow to protect themselves in buying their homes off the plan.

  1. Evaluate the credibility of the builder. Google everything you can about them, and what’s been reported. What else have they built? Have their other buildings been around long enough for defects to show up? Are previous buyers happy? Can you search the developer’s building licence number to see if any complaints have been lodged with regulators?
  2. Anticipate market dynamics, such as general economic conditions that might impact apartment prices. If the local market drops or becomes flooded with apartments, you could be left with a property worth less than you paid for it
  3. Get legal advice on contract documents, and make sure your lawyer knows what to check and examines the contract closely
  4. Understand the rights and obligations associated with community living. All those extra features, like pools, usually come with extra fees
  5. Consider an independent building inspection. If issues are identified at that point, notify the developer immediately. Some defects may be fixable, but others might not become apparent for years to come
  6. Know where to seek assistance. Usually that will be via the fair trading department in your state, so make sure you know how to contact them.


Sacha Reid, Associate Professor, Griffith University; Melissa Pocock, Lecturer, Griffith University; Savindi Caldera, Research Fellow and Project Development Manager, Cities Research Institute, Griffith University, and Therese Wilson, Professor, and Dean of Law, Griffith University

This article is republished from The Conversation under a Creative Commons licence. Read the original article.

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