Browse Forums General Discussion 1 Feb 06, 2009 2:37 pm Hi all,
Sorry for this silly question, but what is the difference between "New homes being built under a building contract" and "New homes being purchased ‘off the plan’" ?? If I signed a contract with a builder (let say with PD or Sim0nds), what kind of contract did I sign? 'Off the plan' or 'a building contract'? Because if the contract is categorized as 'off the plan' type, then the construction doesn't have to commence within 26 weeks of the date of the contract... I'm in the dark here... TIA Cheers, Re: 'Off the plan' VS 'building contract' 2Feb 06, 2009 11:23 pm off the plan usually refers to builders plans for buildings you can't actually view in real life. Either in a multi unit/apartment/housing development where you buy early at a good price before seeing the finished product or in the case of a project home builder they may have many plans they don't build displays for. So when you pick one of these you are often building "off the plan".
Sometimes the ones where you buy during the development stage mean you buy and have to accept much of what the builder plans to put into the building. There are also some developments where if you buy in early enough you can have some say in finishes inside the building's rooms. Re: 'Off the plan' VS 'building contract' 3Feb 06, 2009 11:36 pm Off the plan is literally a pie in the sky. Great during a real estate boom but a nightmare in a down turn. You enter into a contract to buy something without knowing the economic environment at the time of future settlement. Not recommended if you rely on finance to buy. Re: 'Off the plan' VS 'building contract' 4Feb 07, 2009 11:12 am Off the plan can be OK - if the builder has some completed, or near-completed homes he can show you. We bought our first home that way - the real estate agent provided copies of the plans and specs along with the contract of sale, walked us through a just-completed home (same design as ours), we sussed out the block and signed on the dotted line. It was a good buy. And we never had to deal with the builder at all, except for our three-month maintenance check.
I don't think I'd buy an apartment in a big multi-storey complex that way though. I've seen too many of those projects fall apart. Re: 'Off the plan' VS 'building contract' 5Feb 07, 2009 5:08 pm thlo, what would be any different buying any property - we are still subject to the vagaries of the economic climate? I can understand if it is bought for an investment and the actual cash flow is calculated so that we know we can afford it but if you are going to live in it then I cannot see that it makes much difference - but always happy to be convinced!
Also, the main attraction for 'off the plan' sales is that you save a lot of money in Stamp Duty. I am not exactly sure why, but I do know that the SD is the big carrot. Builders are people too.... Re: 'Off the plan' VS 'building contract' 6Feb 07, 2009 6:59 pm No, i was making a general comment.
When buying off the plan, especially in multi-storey complex units, you agree to buy something in the future at prices determined today. When prices come down, what contingency would you have? That's my only concern. (edit) In NSW, with stamp duty exemption for first home buyers upto a threshold, stamp duty is generally not in the equation. Re: 'Off the plan' VS 'building contract' 7Feb 07, 2009 11:30 pm Ok, good point but again probably more crucial for investment as if we buy a house to live in today, and the value goes down then we are still in the same boat to some degree.
Anyway, the Stamp Duty is a big issue in Victoria and that is certainly the carrot that many developers hang - the stick would be the scenario that you have articulated! Builders are people too.... Re: 'Off the plan' VS 'building contract' 8Feb 08, 2009 12:59 am kexkez off the plan usually refers to builders plans for buildings you can't actually view in real life. ..... in the case of a project home builder they may have many plans they don't build displays for. So when you pick one of these you are often building "off the plan". Thanks for the info kexkez.. So my understanding is when I chose one of the builder's floorplan and they don't have a display home for this particular type, the contract will be regarded as 'off the plan'? But how do I spot the difference between those two in the contract ('off the plan' and 'a building contract') ? Do they will write something like 'this contract type is off the plan' OR do they have a totally different contract paper? Re: 'Off the plan' VS 'building contract' 9Feb 08, 2009 1:38 am It really depends on what sort of building you are talking about. Do you mean a standard project builder who has plans that are for houses not currently on display. ( or may never have been on display) or is it for a speculative apartment house/house ?
If it's just a standard house there may not be any difference at all. But if it's something else I imagine there would be information in the paperwork. builda, Kek and thio I suspect have some experience. Give some details of what you mean and then it will be easier to try and answer your questions. Re: 'Off the plan' VS 'building contract' 10Feb 08, 2009 6:44 am thlo No, i was making a general comment. When buying off the plan, especially in multi-storey complex units, you agree to buy something in the future at prices determined today. When prices come down, what contingency would you have? That's my only concern. (edit) In NSW, with stamp duty exemption for first home buyers upto a threshold, stamp duty is generally not in the equation. A good example of this - my DH put a deposit on an off-the-plan apartment back in 2000 as an investment property. The construction went way over time and didn't get finished till 2003. In that time the value of the apartment could have gone either way and DH would have been stuck paying the 2000 price. Luckily for him the value increased by about 30% in that time, so it was a good decision back then. Might not be so much now... Re: 'Off the plan' VS 'building contract' 11Feb 08, 2009 9:02 am THe reality of 'off the plan' buying is more applicable when a developer is building one or more houses on his land as opposed to yours and the stamp duty savings ONLY applies in Victoria for everyone, not just first home buyers.
When a developer is building a spec home, block of apartments, dual occupancy or just a multi-unit development on his land - you are only buying a block of land from him (or a strat title in a multi-storey) so you are only paying stamp duty on that portion, not the value of the finished house as it does not exist. There are also issues with Builders Warranty Insurance as if you sign with the developer then you do not get any insurance. Not that I personally think that is an issue - it is crap insurance anyway (Choice calls it junk insurance!) but still it is an issue if the developer goes under. These are some other links that may be helpful in Vic: [url]http://www.consumer.vic.gov.au/CA256EB5000644CE/page/Building+&+Renovation-Home+Owners-Buying+'off+the+plan'?OpenDocument&1=40-Building+%26+Renovation~&2=10-Home+Owners~&3=50-Buying+'off+the+plan'~ [/url] (you may need to copy and paste this URL as the link doesn't seem to work!) and also from a major developer which really answers it well: http://www.centralequity.com.au/faqs.asp#Anchor-47878 It took us time, but I think we all nailed it! Builders are people too.... Re: 'Off the plan' VS 'building contract' 12Feb 09, 2009 9:53 am Thanks everyone for the reply... Much appreciated..
I've been confirmed by SRO in VIC, that "If you sign a contract to build a house with a builder, the transaction type would be 'contract to build'. 'Off the plan' transaction most common in high-rise developments." Cheers, T1ms Re: 'Off the plan' VS 'building contract' 13Jul 01, 2009 6:36 pm We signed a contract for an off the plan unit 18 months ago. The sunset clause expired and we renewed the deposit bond as we were still happy with the area & the external look of the building as it went up. Out of the blue we recieve a letter from the developers soliciter telling us that plans for an aditional floor on the building had been approved. We are still awaiting a copy of the plans to be forwarded to us. While waiting we have viewed the plans at the local council. Our reading of the plans shows the insertion of a fire stairwell to the aditional level directly above us leaves a 'foot-print' on our floor space (@2x3metres). The result of this is the whole internal space has been reconfigured - most noticably - the ensuite bathroom has been removed. We are still interested in purchasing. We like the area and the building and think we have got reasonable price on our unit. What is the point of looking at a brochure or floor plan if it can be changed to such a great extent after you have entered the contract? I put the above out as a comment on the pitfalls of OTP purchase. I am also after suggestions as to what we should do next. We think there is a loss of amentity. You talk about deletions, are they variations or PS and PC adjustments? pleas list them 1 12029 i wouldn't be worried, you'll definitely miss something, no matter how many times you review. we've spent close to 5 months ensuring everything got reflected in the… 5 9455 I've decided, after a period of confusion (my building broker told me it's probably not worth it to use a lawyer, but others have said it is a must) that I definitely will… 7 26373 |