Buying off the plan in NSW

What to look for when buying an apartment off the plan.

A new apartment or townhouse can be a smart investment or an affordable way to enter the housing market, particularly as a 10% deposit will secure the home, giving you have more time to save while the property is being built without the risk of further price increases.  

While there are many benefits to buying off-the-plan, there are also some risks. Below are eight useful tips and advice. 

1. Developer rating

The reputation of buying off the plan sales suffered in recent years from the poor quality work of a minority of developers. Tougher regulation and penalties for sub-standard work have lifted standards and should lead to better quality in the future. Developers can now demonstrate their reliability and trustworthiness by submitting themselves to stringent independent review to earn a place on the iCIRT register of trusted builders and developers. Before signing any contract, make sure you are buying from a trusted company. If they are not on the register, then you should ask why and consider very carefully before paying any deposit or signing any contract. 

2. Levy estimates

Often the levy estimates provided by the sales agent are based on similarly-sized apartments in the area. However, as buildings are constructed very differently, relying on levy estimates based on other buildings may mean you’re in for a surprise when the building is complete and suddenly the levies are three times higher than the estimates originally provided. Ask the real estate agent for a copy of the outgoings budget. This will show whether the levies have been properly estimated based on the design of the building you’re buying into. There is also an extra level of protection for owners – under recent reforms to  strata legislation, developers can be accountable if estimated levies are deemed unrealistic. 

3. Facilities

A building with little or no facilities, such as swimming pools or gyms, doesn’t always mean low levies. The complexity of the design may attract high maintenance costs (such as maintaining the facade of the building). Insurance premiums can also significantly increase levies – the higher the replacement value is, the higher the premiums will be. Some fixed costs don’t change with volume, such as lift maintenance costs, so they will be shared amongst a smaller number of owners in low rise or medium density developments. 

4. Defects

Due to the complex nature of construction, every building has “defects” or “unfinished work” on completion. A reputable developer will have a plan in place to rectify these defects as quickly as they can, so don’t be afraid to ask your real estate agent what the defect rectification process is not just for individual units but also the common areas which you will collectively be responsible for financially. Since 2018, developers have been required to lodge a defects bond with NSW Fair Trading for strata scheme of four or more storeys. An independent building inspector is responsible to sign off that all defects have been fixed before the bond is released back to the developer. Some developers may also offer a 10-year warranty through Decennial Liability Insurance . 

5. Security

With rows and rows of letterboxes, apartment buildings are a prime target for mail theft. Storage cages also attract petty thieves. Ask your agent what the plans are for building security. Will there be cameras installed at entrances? In the lifts? On the storage cages and car park? Check to see where the mailboxes are being located. The best place is behind security doors in the foyer with a camera facing towards them. 

6. Camera installation

Cameras in the lifts will help to deter people from causing damage or catch those that have so the cost of repair doesn’t fall back on the owners corporation. Ask your agent about whether there are plans for security camera installation or cabling to allow for later security camera installation as laying cables retrospectively can be costly for the owners corporation. 

7. By-laws

Ask for a copy of the draft by-laws and make sure you have a good understanding of what you can and cannot do to your lot. You might need approval from the owners corporation to make alterations if they affect common property. There are also often strict by-laws around the installation of blinds or changes to the floor so it’s wise to check these out before purchase as they could interfere with your interior decorating plans. And importantly if you have a pet, you need to see if it is allowed. 

8. Shared facilities

If you are planning to buy into a larger apartment complex, it’s a good idea to get an understanding of how a Building Management Committee (BMC) works and what impact the shared facilities have on your levies. See our glossary for the definition of a BMC. 


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