Buying off the plan means purchasing a property — typically an apartment or townhouse — before it has been built, based on architectural drawings, floor plans, and renders. You exchange contracts and pay a deposit today, but settlement only occurs once construction is complete, which could be 12 months to two or more years away.
It's a purchasing method that has genuine benefits, particularly in Victoria. But it also carries risks that are unlike anything in a standard property transaction — and understanding both sides is essential before you commit.
The Key Advantages
Lower Entry Price
Off-the-plan properties are typically priced at today's market value, before the building exists. In a rising market, this means you can lock in a purchase price now and benefit from any capital growth that occurs during construction. You're effectively securing a future asset at a present-day price.
Stamp Duty Savings in Victoria
This is one of the most significant financial advantages for Victorian buyers. When you buy off the plan, stamp duty is calculated on the contract price minus the value of construction work yet to be completed at the time of signing — not on the completed property's value. In practical terms, this can reduce your stamp duty bill substantially, sometimes by tens of thousands of dollars, depending on how early in the construction cycle you buy.
For owner-occupiers purchasing in the $600,000–$750,000 range, additional concessions may also be available. A broker or conveyancer can help you calculate the exact duty payable for your specific purchase.
New Home Grant Eligibility
The Victorian First Home Owner Grant of $10,000 applies to off-the-plan purchases, provided the total value of the property does not exceed $750,000 at the time of contract. This is a cash benefit available to eligible first home buyers that is not accessible when purchasing an established property.
Time to Save
Because settlement is deferred by 12–24 months, buyers often use the construction period to save additional funds, pay down existing debt, or strengthen their financial position ahead of settlement. You only need your deposit on exchange — the bulk of the purchase price is due at completion.
The Key Risks
Property Values Can Fall
The same market exposure that can work in your favour can work against you. If property values fall between exchange and settlement — as happened in Melbourne's apartment market between 2017 and 2019 — you may find your property is worth less than you agreed to pay for it. You're still contractually obligated to complete at the contracted price.
Critical risk: Your lender will conduct a new valuation at settlement — if property values have fallen, you may face a shortfall between your loan approval and what the bank will lend. For example, if you agreed to buy at $700,000 but the bank's valuation comes in at $630,000, your lender will only advance a loan based on $630,000. You'll need to find the difference yourself or risk losing your deposit.
Finance Reassessment at Settlement
When you exchanged contracts, your broker may have obtained pre-approval or indicative approval based on your finances at that time. But lenders reassess your borrowing capacity at settlement — which could be two years later. If your income has changed, you've taken on new debt, interest rates have risen significantly, or lending policy has tightened, you may find yourself in a very different borrowing position than when you first signed.
This is a genuine risk that catches buyers off guard. It's why maintaining your financial position throughout the construction period — avoiding new debt, not changing jobs, keeping your savings — is critically important when you have an off-the-plan contract pending.
Developer Risk
The developer you sign with today may not be the entity that completes your building. Construction finance is complex, and developers can face funding shortfalls, insolvency, or project delays for reasons entirely outside their control. Research your developer carefully — look at their completed projects, their financial backing, and whether they have a track record of delivering.
You Can't Fully Inspect Until It's Done
No matter how impressive the renders and display suite, you won't be able to inspect the actual apartment or townhouse until it's built. Finishes may differ from what was shown, room sizes can feel different in reality, natural light may be affected by adjacent buildings, and the overall quality of construction may not match expectations.
You're entitled to a pre-settlement inspection before you complete, and any defects noted should be rectified before you hand over the balance of the purchase price. Have a building inspector attend this inspection — don't rely on your own eye alone.
Changes to Building Plans
Developers typically retain the right to make minor changes to the building plans during construction. Review the contract carefully for what constitutes a "minor" variation and what protections you have if changes are substantial. In some cases, developers have used this flexibility to reduce apartment sizes, change materials, or alter common areas significantly.
Sunset Clause Risks
A sunset clause sets a deadline by which the developer must complete the building and allow settlement to occur. If the building isn't finished by that date, either party can typically rescind the contract and the deposit is returned.
Be aware: There have been documented cases in Victoria and NSW of developers deliberately allowing projects to exceed sunset clause deadlines so they can rescind contracts, re-list the properties at higher current market prices, and resell them. The Victorian government has introduced protections limiting developer-initiated rescissions under sunset clauses, but buyers should still scrutinise these clauses closely and seek legal advice before signing.
Due Diligence Before You Sign
Buying off the plan requires thorough upfront research. Your checklist should include:
- Developer track record: Inspect completed buildings they've delivered. Talk to existing owners or strata managers if possible.
- Sunset clause terms: Understand the deadline and which party can trigger a rescission — and under what circumstances.
- Owners Corporation (body corporate) fees: Estimates provided at contract stage are often understated. Model your ongoing costs conservatively.
- Owner-occupier vs investor mix: Buildings with a high proportion of investor-owned units often have lower owner-occupier demand, which can affect resale values and lender appetite. Some lenders won't lend on buildings with less than a 40% owner-occupier ratio.
- Building specifications: Review inclusions carefully. What's in the display suite may be an upgrade — confirm exactly what's included in your contract price.
- Car parking and storage: Confirm these are on the title as registered lots, not licences. A car park on title has very different value and legal standing to a licence arrangement.
How a Broker Can Help
Finance for off-the-plan purchases requires careful planning across a multi-year timeline. A broker can help you understand your likely borrowing position not just today but at the point of settlement, scenario-plan for valuation shortfalls, choose a lender whose policies align with the specific building and developer, and structure your deposit in a way that protects you.
Given the complexity involved, speaking with a broker before you exchange — not after — is strongly recommended. The decisions you make at contract stage have a direct bearing on your options at settlement.