Red flag alert! Things to look out for if you’re thinking of buying new or off the plan

Apartment living has become the way of life for many Sydneysiders, and the influx of new developments has seen a lot of shiny new properties enter the market. These brand new builds seem like an excellent investment from the outside, but it’s more important than ever to remember that you’re not just buying the apartment; you’re buying into the entire building. 

While it may seem like the safe option to choose new or off the plan, these properties can come with some significant problems that you need to consider before putting the deposit down. 

Consider the developer's motivation and how that impacts the quality and value of the building.

Developers are in it to make money, pure and simple. Unfortunately, this grab for cash can lead to cutting costs (and often corners) wherever possible to increase their return. The developer has precalculated what they need to sell each apartment before they hit the market, so the price you pay isn’t accurately reflecting the value. It’s like buying a new car. The minute you drive it off the lot, it’s already lost value. 

You definitely pay a premium to be the first person to flush the toilet! 

The building certification process leaves a lot of room for errors. 

The council is no longer responsible for inspecting and signing off new developments to ensure they meet all codes and are safe to inhabit. It’s now up to the builder to pay for the inspection, which is an obvious conflict of interest. You only have to look at two recent stories, Opal Towers in Olympic Park and the more recent Mascot Towers, to see how bad things can go for residents when the building hasn’t been built, inspected or appropriately certified. 

Both buildings were riddled with defects that have caused irreparable damage and significant losses for the owners. Not to mention the stress, time and money wasted being forced to evacuate your home at short notice with no certainty as to when you can return. 

Complicated contracts that act in the builders favour are another red flag. 

I’ve worked with clients who bought off the plan and waited more than two years beyond their initial due date before they were able to move into the apartment. In that time, their circumstances had changed, and the property no longer suited them, but they were locked in with a complicated contract. Nightmare!  

If you’re considering buying new or off the plan, make sure you work with a specialist property lawyer, not just your run-of-the-mill conveyancer. The lawyer will help you understand the many ins and outs of the contract, so you know exactly where you stand. 

You’ll never get the full story when buying into a brand new development.

It’s not uncommon to have multiple developments at different stages nearby. This means that things like your view, the amount of natural light in your apartment, the noise or the traffic downstairs can’t be accurately gauged before you commit. People get excited by the gorgeous renders and fail to consider what will happen when another building starts going up next door. Instead of a great open view from the balcony, you could be stuck with years of construction noise and a view into your neighbour's window when it’s done. 

Strata history matters when buying an apartment, and new builds have none. 

In my experience, new developments attract many investors who aren’t active strata members, and they typically vote in the interest of keeping levies and their costs artificially low. This can cause a lot of headaches when you’re trying to make improvements to the building, and it’s generally unfairly left to owner-occupiers to ensure the property is being run properly. Many builders will actually keep hold of enough apartments within the development to maintain voting power and ensure they’re able to continue turning a profit.

There are no perfect buildings, and every buy comes with a bit of compromise. But it’s important not to get blinded by the sparkle of a brand new apartment and evaluate the added risk you undertake when buying new or off the plan. 

Having the complete picture is the best way to make an educated decision, and my team and I are more than happy to answer your questions, contact us here any time.