Buying off-the-plan property explained: Potential benefits and risks

Buying off the plan means purchasing a property before it is built. You commit to the purchase based on architectural plans, designs and project specifications, not a finished product.

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Off-the-plan purchases are common for apartments and townhouses in new developments. This guide covers the benefits, risks, deposit requirements, settlement process and how your home loan works, so you can decide whether buying off the plan suits your goals.

What does buying off the plan mean?

Buying off the plan means signing a contract to buy a property that hasn’t been built yet or is still under construction.

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You make your decision based on architectural plans, 3D renderings, display suites or floor plans provided by the developer. You won’t see the finished property until after you’ve committed.

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Settlement occurs once construction is complete and the property receives its occupancy certificate. This can vary depending on the project and construction timeline.

How the off-the-plan buying process works

• Research the developer, project location and comparable sales in the area
• Review the contract of sale with a solicitor or conveyancer - check the sunset clause, deposit terms and any variation clauses
• Pay the deposit - Deposit requirements vary by developer and contract. A deposit is often required when you sign the contract and is usually held in a trust account until settlement.
• Wait for construction to complete - the developer may provide progress updates at key milestones
• Complete a pre-settlement inspection to confirm the property matches the agreed plans and specifications
• Finalise your home loan - your lender will revalue the property and reassess your finances before releasing funds
• Settle - pay the remaining balance and take ownership of the property

What are the potential benefits when buying off-the-plan?

Buying off the plan can offer some potential benefits. These may include:

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Agreed purchase price - the purchase price is set in the contract, but the property’s market value may change before settlement. If property values rise, the property may be valued higher at settlement.

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Potential market movement - the property’s value may change between contract signing and settlement. This could work in your favour or against you.

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More time to save - you typically pay a deposit upfront and don’t pay the balance until settlement, giving you time to build savings or reduce other debts or plan your move, depending on your circumstances.

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Stamp duty savings - Stamp duty concessions may be available in some states or territories for eligible off-the-plan purchases. Stamp duty concessions may be available in some states or territories for eligible off-the-plan purchases. The way any concession is calculated depends on the rules in your state or territory. In Victoria, a temporary off-the-plan duty concession may apply to eligible apartments, units and townhouses in strata subdivisions for contracts entered into before 21 October 2026. Eligibility rules apply.

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Customisation options - many developers let you choose finishes, colour schemes and sometimes even modify floor plans, especially if you buy early in the project.

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These benefits depend on market conditions, developer reliability and the terms of your contract. Consider seeking independent legal advice before signing.

What are the potential risks of buying off the plan?

Off-the-plan purchases can carry risk. Understanding them upfront can help you protect yourself.

• Construction delays - weather, labour shortages and supply chain issues can push completion well beyond the estimated date. If you’re renting while you wait, the extra months of rent add to your total cost.
• Market value drops - if the property market falls between contract signing and settlement, your property could be worth less than you agreed to pay. You’re still locked into the contract price.
• Valuation shortfall - your lender may order a valuation when the property is complete. If the valuation comes in lower than the purchase price, you may need to cover the gap with additional cash or renegotiate with the developer.
• Design or layout changes - the finished property may differ from the plans you originally reviewed. Some contracts include variation clauses that allow the developer to make changes without your approval. Check for these clauses before signing.
• Finance risk - by the time construction is finished, your financial situation, interest rates or lending policies may have changed. You’ll need to reapply for formal approval before settlement.
• Developer insolvency - if the developer goes bankrupt before completing the project, settlement may be delayed significantly. Deposits are often held in a trust account, but this does not guarantee immediate recovery and outcomes depend on the contract and legal process.

Consider seeking independent legal advice to review the contract before you sign. A solicitor can identify clauses that shift risk to you, such as sunset clauses that favour the developer or broad variation clauses.

How much deposit do you need to buy off the plan?

Deposit requirements vary by developer and contract. A deposit is often required when you sign the contract and is usually held in a trust account until settlement.

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The deposit is paid when you sign the contract of sale. It is held in a solicitor’s trust account, not the developer’s bank account, until settlement.

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You don’t pay the balance until the property is complete and ready to settle. This gives you the construction period to save, reduce debt or arrange your finances.

Alternatives to a cash deposit

Not all buyers use cash for the deposit. Other options include:

• Bank guarantee - your bank provides a written guarantee to the developer instead of cash. Your savings stay in your account earning interest.
• Deposit bond - an insurance product that acts as a guarantee. You pay a premium to the bond provider instead of handing over cash. This is common for investors leveraging equity in another property.

Consider checking with the developer first, as not all accept deposit bonds or bank guarantees.

What is a sunset clause?

A sunset clause is a deadline written into the contract. If the property is not completed by that date, either party may be able to terminate the contract and walk away.

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For buyers, a sunset clause may provide a way to exit the contract if the project is not completed by the agreed date. If the project stalls or is abandoned, you may be able to recover your deposit, depending on the contract and circumstances.

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However, some contracts also give the developer the right to terminate at the sunset date. In a rising market, a developer could use this to cancel your contract and resell the property at a higher price.

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Several states have introduced laws to prevent developer misuse of sunset clauses. In Victoria and NSW, a developer generally cannot terminate the contract via the sunset clause without your consent or a court order.

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Always have a solicitor review the sunset clause before you sign.

Do you get a cooling-off period when buying off the plan?

Cooling-off rights may apply when buying off the plan, depending on the state or territory and the contract. They give you a short window after signing the contract to change your mind with a penalty.

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The rules vary by state or territory and by contract type. Some off-the-plan contracts may have longer cooling-off periods than standard property contracts. Before signing, check the cooling-off rules in your state or territory and get independent legal advice.

Can you save on stamp duty when buying off the plan?

Stamp duty concessions may be available in some states or territories for eligible off-the-plan purchases. The way any concession is calculated depends on the rules in your state or territory.

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For example, in Victoria, a temporary off the plan duty concession may apply to eligible apartments, units and townhouses for contracts entered into before 21 October 2026. Eligibility rules apply.

What happens at settlement for an off-the-plan purchase?

Settlement is the final step. It happens after construction is complete and the property receives its occupancy certificate.

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At settlement:

• Your lender releases the loan funds - they will have completed a final valuation and reassessed your financial position before this point
• You pay the remaining balance of the purchase price (the total minus your deposit)
• Legal ownership of the property transfers to you

The settlement process is similar to buying an established property, except your lender won’t finalise the loan until the build is complete. The developer will provide notice once the property is ready to settle, with timing depending on the contract.

Pre-settlement inspection checklist

Before settlement, you’ll be invited to inspect the property. This is your chance to confirm it matches the contract specifications. Check:

• Room dimensions and layout match the plans
• All inclusions listed in the contract are present (appliances, fixtures, finishes)
• No visible defects in walls, floors, tiling, paintwork or joinery
• Plumbing, electrical and ventilation systems are working

Report any defects to the developer in writing before settlement. Many contracts include a defects liability period during which the developer may be required to address issues, depending on the terms.

How do home loans work for off-the-plan purchases?

Home loans for off-the-plan purchases work differently to standard property purchases because the property is not complete at the time you sign the contract.

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You can start the process early, but your lender will usually only provide formal approval once the property is built and valued.

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Here’s how it typically works:

• Before signing the contract: consider getting a borrowing estimate or conditional pre-approval to understand your budget
• During construction: consider keeping your finances stable where possible, as changes may affect your loan approval
• Near completion: your lender orders a valuation of the finished property and reassesses your income, expenses and credit history
• At settlement: the lender releases the funds, and you pay the remaining balance

Because months or years can pass between signing and settling, your borrowing conditions may change. Interest rates, lending policies and your personal finances can all shift.

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It may be worth allowing a financial buffer in case interest rates, lending policies, valuation outcomes or your personal circumstances change before settlement.

What happens if the valuation is lower than the purchase price?

If the lender’s valuation is lower than the purchase price, the approved loan amount may be lower than expected. You may need to contribute more funds, review your loan structure or seek advice on your options.

Checklist before buying off the plan

Before you sign an off-the-plan contract, consider:

• Getting independent legal advice - have a solicitor review the contract, sunset clause, variation clauses and disclosure documents
• Researching the developer - check their track record, completed projects and any history of disputes or insolvency
• Reviewing the deposit terms - confirm the amount, payment method and that the deposit is held in a trust account
• Checking your borrowing capacity - use Unloan’s borrowing power calculator to estimate your budget
• Reviewing the plans carefully - compare floor plans, inclusions and finishes to the display suite or marketing materials
• Investigating the area - check council zoning, planned infrastructure and other developments nearby that could affect value
• Factoring in all costs - deposit, stamp duty, legal fees, loan costs and strata levies (for apartments and townhouses)
• Knowing your cooling-off rights - check the cooling-off period for your state before you sign