To buy off plan or an existing home, which is better?
Category Advice
Agents are often asked whether it's better to buy an existing home or a new property off plan from a developer, but there isn't a one-size-fits-all answer as both options have their benefits. So, it ultimately depends on your personal requirements at the time.
- A little research goes a long way
As with most things in life, the only way to make the right decision is to make an informed one, so a little research will go a long way to help you understand which option is the right one for you right now. The biggest advantages of buying an existing home are that the neighbourhood is usually established so there is little risk of having the disruption of ongoing construction and these areas will also have a developed infrastructure and an array of amenities like shopping centres, schools and sports facilities in close proximity. Gardens are also most likely well established, so you won't have to spend valuable time and additional money on creating a garden from scratch.
- Explore suburb in which you are looking to buy
The best way to determine these factors and help you decide is to explore the suburbs in which you are looking to buy, taking note of the infrastructure and choice of amenities as well as the sale prices the area commands. Once you have this information, it will be easier to choose between buying an existing or a new home and to evaluate the pros and cons.
- Dated properties need modernisation, can be costly
The two main disadvantages of an existing home are that the property may be dated and in need of modernisation or some renovation and also that it's likely to require maintenance sooner which can prove costly over time. It's important to inspect the property thoroughly before buying, because although small maintenance issues are to be expected, you don't want to be unpleasantly surprised by major defects which only become evident at a later stage, resulting in additional expenditure. The main advantage of buying a brand-new home is that everything will be fresh and new with none of the wear-and-tear of a property which has previously been lived in, where no major maintenance, refurbishments, or repairs will be necessary for the next three to five years.
- Buying off-plan lets you choose
And, if buying off-plan, you can choose the layout you prefer, the size of the unit, and usually there is a list of finishes from which to choose. The initial layout can also be less as with new developments there is also no transfer duty (you do pay VAT) and some developers add extras such as appliances or a levy holiday. It's also possible to build a much more energy efficient house using all the new materials and products which will ultimately save you money on running costs in the long-term. Although it is possible to make energy friendly changes to an existing property, it would never be at the same level as a new build.
- New homes have NHBRC guarantee
Another compelling benefit of buying new from a developer is that these homes come with a National Home Builders Registration Council (NHBRC) five-year guarantee, with the roof guaranteed for one year. Buyers also have a stipulated period after moving into the property during which time any snags will be made good by the developer. And if you buy from a developer the Consumer Protection Act (CPA) will safeguard you, whereas if you buy from a private seller the CPA doesn't apply.
- Under the CPA, a purchaser has the right to:
- Within three months, instruct the builder to rectify non-compliance or deviation from the terms, plans and specifications of your mutually binding agreement;
- Within 12 months, instruct the builder to repair roof leaks attributable to workmanship, design or materials; and/or
- Within five years, instruct the builder to rectify major structural defects caused by non-compliance with technical building standards.
Potential disadvantages include working through snag lists when you move in, the waiting period until completion might not suit you, and the choice of designs is usually limited.
- Although buying off plan does have many significant advantages buyers should be aware of the following risks:
- You may not be able to visualise the end product from architectural drawings, plans or artist's impressions, so the final product may not be quite what you envisaged. It's essential to double check specifications and finishes to make sure the end product will be exactly what you wanted;
- If you buy into a development you may have to compromise on the date of occupation and transfer depending on the nature and circumstances of the particular development;
- And you will have far less control than if you were building your own home so always investigate the track record of the developer for quality of workmanship, financial stability, integrity and reliability. Find out about developments the developer has previously completed.
- To avoid any number of potential pitfalls, it's important to invest in developments where the developer has a good reputation and proven track record.
Regardless of which option you choose, the better informed you are the easier it is to avoid potential pitfalls and minimise the risks so you always need to do your homework before signing an offer to purchase.
Author: Property 24 - Extracts
