Buying 'Off the Plan' in WA

HOUSE AND LAND

House and Land refers to the process of purchasing land and constructing a new home. This process can involve purchasing land from a land developer or a lot in an established area from a private seller. The process of purchasing house and land is usually broken down into three steps. 

Finance

The best place to start, as with any property purchase, is by determining your budget and financial capability. You can seek assistance directly from your bank, or from a specialised finance broker, who will assess your income, outgoings and other factors to determine your borrowing capacity and eligibility to borrow from a broad panel of lenders. A broker will be able to provide what is known as a ‘Letter of Eligibility’ that will be accepted by most land developers and builders for the purpose of entering into contracts to buy and build, rather than needing to apply for a bank pre-approval. Finance brokers can then assist you with your loan application with the most suitable lender for your individual situation. You may wish to find your own finance broker, or the majority of home builders will have affiliated or in-house brokers that they can connect you with.

Land

With land, there are two options depending on your location preferences and budget.

In established areas, commonly referred to as Brownfield sites, you will generally be seeking to purchase either vacant land from a private seller, or an established home with the intention of demolition. You should be aware that these sites can carry significant additional costs depending on the conditions of the site and any previous use, and not all builders will build on these sites.

Alternatively, many buyers opt to purchase land from a land developer in a new community. Known as Greenfield sites, these lots are usually developed to a high standard, requiring minimal siteworks as part of the building process leading to reduced costs. These developments are more commonly located in Perth’s growth corridors, however some smaller developments can be found in established areas too.

It is recommended that prior to committing to purchase any land, you assess the anticipated build costs associated with the lot to ensure that you have the financial capacity to build a suitable home.

House

There are a few different avenues that you may wish to consider with choosing a builder and design for your home.

Most medium to large scale residential building companies now act as a one-stop shop and can assist you with the entire process from finance, to sourcing land and deciding on your home design. You will find many of these builders in Perth’s wide range of display villages where you can view their latest home designs and seek information from their consultants, or you can view their extensive websites and enquire digitally.

Building brokers have become more commonplace in Perth in recent years. These consultants are not affiliated with one builder and can instead assist you with design (and often finance and land sourcing too) and then determine the most suitable builder from their panel to suit your needs, or put your design to tender if that is more appropriate to seek the best price.

For high-end homes, you may instead seek to engage an architect and then seek a builder to construct your design. While this process can give you a more bespoke outcome, costs are generally higher and the process more complex, which can be a deterrent for first time home builders.

Titled vs Untitled Land

A factor to consider when purchasing land is whether the land is titled or untitled.

Titled land refers to the subdivision being complete, and generally the land will be ready to settle on and commence construction immediately.

Untitled land is common when purchasing in new developments and means that the process of subdivision is not yet complete. If your lot is not yet titled, you can still engage a builder and commence the pre-construction phase, however you will be unable to settle on the land or start construction until the title is issued.

A land developer will usually provide an anticipated title date for untitled lots, and it is worth bearing this in mind in working with your builder to ensure that you are aware of any applicable price-hold periods that form part of your quotation and preliminary contracts and implications of exceeding these.

APARTMENTS

Purchasing an apartment off-the-plan may allow purchasers more options for customisation than purchasing once constructed, and can also provide the opportunity to secure the most desirable apartments within a building. However, buying an apartment off the plan may carry higher risks and lead times that should be considered.

Apartments will often commence sales well in advance of construction commencing, with a certain percentage of presales required prior to the developer starting works. Sales contracts at this stage will often be ‘unconditional’, meaning that deposits are non-refundable should you be unable to proceed with your purchase. With the longer construction times for apartment projects, it is important to consider whether you will be in an equal or better financial position at the time of completion to be able to finalise your purchase.

As with building a new home, the first step is to determine your financial capacity. Refer to the above section titled Finance and consult with the sales consultant for your chosen apartment project for any required documentation.

Purchasing apartments closer to completion or post-completion may be possible if the project is not sold out by this time. At this stage you are unlikely to be able to make any modifications to the apartment, but may be able to make a purchase contract subject to finance and you will encounter a faster contract to settlement time.