Legal Advice

Pros and Cons of Buying Off the Plan

Buying Property

Property lawyers will tell you that buying property off the plan means you are putting down a deposit for a property that is not yet built. This happens most often when a property developer buys a big acreage of land that he intends to subdivide into smaller blocks and build homes on, then sell. To get the money for that, he advertises the plans, which allows prospective buyers to choose one of many blocks in an area they like.

There are pros and cons of buying off the plan that should be carefully considered before going ahead.


There are several advantages for this type of purchase.

  • You only have to pay a deposit to start with and no more until the home is built.
  • This allows you to put off getting a loan if the interest is high, but you think it might fall in the next few years.
  • It may allow you to save up more so you don’t have to get loan, or can get a smaller one, thus saving some costs.
  • You may get to have a say in which finishes are used for your home, since you are the buyer.
  • It can allow you plenty of time to sell your own home, or to become more stable financially.


As with most things, there are some disadvantages.

  • It may take many years before the developer can get enough deposits together to continue the development and finish building your home.
  • They can go broke if they don’t get enough interest in the development so you’ll lose your deposit and your home.
  • If you are unable to meet the settlement the seller can cancel the contract and re-list the property. If it fails to sell at the same price you agreed to pay, the seller may be able to sue you for the shortfall.
  • If the plan you are buying off is an apartment with strata title, make sure you read carefully what the by-laws are so you know what to expect.
  • It is unlikely to be subject to finance approval because most lenders can’t make a lending offer that lasts for years due to the changes in the market and in the interest rates.

Add to this, you don’t know what the quality of the building will be, unless the builder also has some show homes for you to view. Even then, you can’t be sure of the quality in yours.

However, buying off the plan does suit some people for various reasons; it is just wise to go into such a contract with your eyes open and know what to expect. That’s the same as with any other major purchase you make over your lifetime.