A word of warning however, when buying off the plan, purchasers should do their homework.

The purchase of real estate is very well regulated in Victoria and deposits which are placed in solicitors trust accounts are effectively guaranteed. However, purchasers should remain cautious and investigate matters before proceeding with the purchase of a property, signing a contract and committing funds.

The stamp duty saving is not available simply because a property is purchased off the plan. The maximum stamp duty saving is only available when buying brand new off the plan before construction has commenced. If buying a refurbished building or rebuilt existing shell such as an old office or old apartment building, the maximum stamp duty saving is not available.

There are a number of investigations which should be considered prior to purchasing a property.

Firstly, find out whether you are buying from an agent or directly from a developer.

If you are buying through a real estate agent and there are many experienced real estate agents in Melbourne, you should enquire as to the agent’s experience in selling apartments off the plan.

Many agents simply have the job of selling and they move from industrial to commercial to residential properties without specialising in one particular market. In fact many agents might be selling in Melbourne one day, Sydney or Queensland the next.

It is equally important to enquire about the developer. Look at the developer’s completed projects - not just one, but two or three or even more. Ask for the developer’s history in terms of years in the property industry - is he a professional developer or a retired businessman such as a retailer or manufacturer.

Don’t be fooled by glossy brochures and fancy display suites, that is not what you are buying.

Make sure the contract fully discloses all charges. Look for hidden charges or any way in which the price you are paying may increase.

Make sure the construction of the development proceeds. You don’t want to have your money tied up and then discover the developer does not have the ability to complete the development because he cannot get the funding or he has not sold enough apartments.

There are cases around Melbourne at present where developments are not proceeding or are being delayed.

Another important question is how long has the development been on the market. If it has been around for a long period of time, then further investigation may be required.

Confidence in the developer is essential. Dealing with an experienced person or group, someone who has been in the business for a number of years, will assure the purchaser that obligations will be met, problems rectified and warranties observed.

Sometimes syndicates are formed for a single project. However, once the development is sold, and the syndicate dissolves, quite often the buyer is unable to locate those responsible when rectification work is necessary.

Look for after sales service. Who will manage your development and who will honour your rental guarantee.

When buying an apartment off the plan it is just as important to be assured of ongoing leasing and management services which can be relied upon.

If the developer and the management company are the same, no-one will be able to deny liability for your reasonable requests.

Lastly but probably most importantly what is the real financial strength of the developer. Ask the developer to show you his balance sheet.

A published audited balance sheet is a very reliable document. Don't be shy in this regard. The developer is asking you to sign a contract and you are committing yourself to outlaying a large sum of money.

The above questions and investigations are quite reasonable. The purchase of a property is a very important decision, particularly when you are trusting an agent or developer with your property purchase "off the plan". Ask the questions.

Potential purchasers interested in further information about residential development in and around Melbourne, are invited to contact Central Equity on Tel (03) 9600 1111 or inspect www.centralequity.com.au 7 days a week, 24 hours a day.

For further enquires, you are invited to contact Central Equity on Tel: (03) 9600 1111 or visit our web site www.centralequity.com.au.


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Disclaimer: Central Equity and its subsidiaries (including Melbourne inner City Management) are in the business of building and selling accommodation, including apartments, in Melbourne. Readers should obtain their own independent financial and legal advice.