Buying Off the Plan: Finance, Deposits, Duty and Contract Risks

Buying off the plan means agreeing to buy a property before building work is finished. Construction may be unstarted or partly complete. The original focuses on apartments and complexes, where plans and renderings help describe a finished property that cannot yet be fully inspected.

The original was published on 11 October 2019 and modified on 3 September 2025. This enriched version corrects its deposit, duty, sunset-clause and insolvency descriptions using Victorian primary sources checked on 15 October 2026. The relevant state, contract and transaction date still determine the actual position.

What "Buying Off the Plan" Means

The contract sets obligations well before the completed property is ready to occupy. Settlement depends on its terms and applicable legal requirements, not simply a universal “practical completion” milestone. Ask your conveyancer to identify registration, occupancy and notice requirements and the possible timeframe, which may span months or years.

Because you cannot walk through the finished home before committing, the purchase requires a higher degree of research, due diligence and professional advice than a standard established-property purchase.

Potential Benefits of Buying Off the Plan

Stamp Duty Savings

The original cites $18,700 as a Victorian duty amount and describes duty as applying only to land. It provides no transaction value or calculation establishing that figure as a general saving. Do not use it as a duty quote. Any concession depends on eligibility and the applicable calculation, rather than automatically removing all building value.

For Victoria, SRO guidance explains that eligible construction costs incurred after the contract date are deducted in calculating dutiable value. Costs already incurred can therefore matter. The applicable concession and calculation require transaction-specific information from the vendor and conveyancer.

Deposit Structure and Time to Prepare

The source’s broad 5%–20% deposit range, with 10% described as usual, is historical and must not be used as the Victorian legal limit. Consumer Affairs Victoria states a maximum 10% deposit for the off-the-plan contracts it describes. Confirm the applicable contract category and jurisdiction; the contract deposit is also different from the total cash required to settle.

This extended window can be an advantage for buyers who are building their savings position, though it is equally important to ensure that your finance approval and borrowing capacity remain in place at the time settlement is required. Discuss the timing of your finance with Natloans before signing.

Potential Input Into Design

In some developments, buyers who are funding the construction of the complex may have the opportunity to contribute to interior design choices and aesthetic finishes to varying degrees. The source article notes that what is actually possible will depend on the specific developer and project; buyers should verify this directly with their developer before assuming any design input is available.

Modern Construction and Condition

A new property may offer modern systems and design choices, but age alone does not prove energy performance, low costs or freedom from defects. Check specifications, warranties, inspections and expected maintenance. The original’s suggested benefit from a hypothetical future carbon tax is speculative, not an established tax entitlement. No previous occupants does not mean no construction damage or defective work.

Key Risks to Understand

The Sunset Clause and How It Can Be Misused

A sunset clause addresses specified events by a deadline; missing the date does not universally cancel the contract or automatically return every deposit. Under Victorian residential off-the-plan rules, a vendor needs each purchaser’s written consent after at least 28 days’ notice, or a Supreme Court order, to rescind under the clause. Purchasers need not consent. See Sale of Land Act 1962, sections 10B–10E.

The source article notes that while sunset clauses were introduced to protect buyers from excessive delays, they have in some cases been exploited. A small number of developers have been reported to deliberately allow a project to miss the sunset date so that they can terminate existing contracts and resell the properties at higher prices in a rising market. Buyers should research a developer's track record carefully and obtain independent legal advice on the sunset clause terms in any contract before signing.

The source describes misuse of sunset clauses to resell at higher prices. Its account does not establish the legality of any particular termination. Get advice on the actual trigger, notices and available rights before accepting a proposed cancellation or extension.

The Finished Property May Not Meet Expectations

Committing to a property based only on plans and renderings carries the risk that the completed building does not match what was imagined or implied. Finishes, proportions, natural light, noise and the immediate surroundings can all differ from what was anticipated. Buyers should review plans and specifications as carefully as possible and, where available, inspect display suites or comparable completed developments by the same builder.

Developer Insolvency

Developer insolvency can delay or derail a project, but the original claim that you should expect never to see your deposit again is too absolute. Victorian section 9AA requires deposits for the covered contracts to be held on trust by the vendor’s legal practitioner, conveyancer or licensed agent until subdivision registration. Check who holds your money, the contract and any subsequent release; do not assume either certain loss or guaranteed recovery. A deposit bond is not automatically insurance against developer failure.

Key Factors at a Glance

Factor What the Source Says What to Confirm
Typical deposit range Historical source range; see the corrected deposit section for the applicable Victorian limit Confirm with the developer and your broker
Stamp duty position Historical $18,700 and land-only descriptions are not a current duty calculation Confirm current concessions with state revenue office or solicitor
Sunset clause A contractual deadline with specific legal rights; no automatic cancellation should be assumed Have a property lawyer review the clause before signing
Design input Possible in some developments; varies by developer Verify directly with the developer
Developer risk Insolvency can put deposit at risk; research track record Check developer history; confirm deposit protections with a solicitor
Finance timing Not addressed in detail in the source article Discuss settlement timing and finance conditions with Natloans

Finance Considerations for Off-the-Plan Purchases

Arranging finance for an off-the-plan purchase has some important differences from financing an established property. A lender's valuation of the property will typically not be finalised until the building is complete, which means the valuation at settlement — and therefore the loan amount the lender will approve — may differ from the purchase price agreed at the time of signing. If property values in the area have moved during the construction period, this can affect how much you are able to borrow at settlement.

It is also worth noting that lending policies and your own financial circumstances can change between the time you sign the contract and the time settlement is required. Natloans can discuss what these conditions may mean for your specific situation and help you understand the finance options available to you.

The source article does not detail specific loan products for off-the-plan purchases. For information about home loan options that may be relevant to this type of purchase, visit the Natloans home loans page.

Questions and Answers

What does buying off the plan actually mean?

It means buying before construction is finished, including partly built projects. The finished result cannot be fully inspected at signing. Settlement conditions come from the contract and applicable law; ask your conveyancer to explain them.

What does Natloans' off-the-plan article discuss?

The article introduces the concept of buying a property before it is completed and sets out the main benefits and risks, including potential stamp duty savings, deposit structure, completion delays, sunset clause risks and developer insolvency. It was published in 2019; its legal descriptions should not be treated as a current interpretation of any specific contract or as current legal or tax advice.
Source: natloans.com.au/buying-off-the-plan/

What should I clarify before relying on finance for an off-the-plan purchase?

Discuss your proposed purchase with Natloans and have the contract reviewed by an appropriately qualified legal adviser before signing. Pay particular attention to the finance conditions, the timing of settlement and the circumstances in which settlement must occur, as these can differ significantly from a standard property purchase.
Source: natloans.com.au/buying-off-the-plan/

How much deposit is typically required?

The historical source describes 10% as common and 5%–20% as a range. That upper figure is not the Victorian limit. See the corrected deposit section above and distinguish the signing deposit from the funds needed at settlement.

What is a sunset clause and why does it matter?

It links a deadline to specified events and potential termination rights. It does not automatically end every contract when a date passes. The corrected sunset section explains Victorian vendor restrictions; have a solicitor assess your own rights and notice obligations.

What happens if the developer becomes insolvent?

Insolvency is a project and financial risk, but deposit loss is not inevitable. See the trust and deposit discussion above. A developer’s reputation alone is not a substitute for checking the contract and how the deposit is held.

Are there stamp duty benefits to buying off the plan?

Potentially, if the applicable concession conditions are met. The old $18,700 statement is not a general saving or verified duty quote. Use the current SRO guidance and a conveyancer’s transaction-specific estimate.

Can I choose finishes or contribute to the design?

In some developments, buyers who are funding the construction may have the opportunity to contribute to interior design choices. What is available varies significantly by developer and project; verify directly with your developer what input, if any, is offered.
Source: natloans.com.au/buying-off-the-plan/

What are the practical advantages of a newly built property?

Modern design and no prior occupant wear can be advantages, but a new property can still have defects, incomplete work and ongoing maintenance costs. Check the actual specification and inspections rather than assuming efficiency or a defect-free result.

What if the finished property is not what I expected?

Because the purchase decision is made from plans and renderings, the completed property may not match expectations in terms of finishes, proportions or surroundings. Reviewing the contract specifications carefully and, where possible, inspecting comparable completed projects by the same developer can help manage this risk.
Source: natloans.com.au/buying-off-the-plan/

Is buying off the plan a good or bad decision?

The Natloans article deliberately avoids labelling the decision as simply good or bad. Whether it suits a particular buyer depends on their financial position, risk tolerance, the specific development and developer, and the conditions of the contract. Professional financial and legal advice is recommended before committing.
Source: natloans.com.au/buying-off-the-plan/

How can Natloans help with an off-the-plan purchase?

Natloans can discuss your financial situation, help you understand home loan options that may be relevant to an off-the-plan purchase, and provide a quote. Contact Natloans on 1300 955 791 or visit the home loans page for more information.
Source: natloans.com.au/buying-off-the-plan/

Next Steps

  • Speak with Natloans about your finance options and the timing considerations specific to off-the-plan purchases. Call 1300 955 791 or visit the home loans page.
  • Engage a property solicitor to review the off-the-plan contract, including the sunset clause, deposit conditions and any developer obligations, before you sign.
  • Research the developer — check their track record, completed projects, financial standing and any publicly available information about their business history.
  • Confirm stamp duty concessions with your state revenue office or a qualified adviser, as the rules described in the 2019 source article may have changed.
  • Understand your finance conditions — particularly how a lender will value the property at settlement and what happens if your circumstances change during the construction period.

Source References

Historical Natloans observations are retained with corrections. This page does not determine the legal or tax treatment of a particular contract. Independent legal review and a current finance assessment remain necessary before committing.

Victorian duty update and pre-signing checks

The current SRO eligibility page lists the temporary concession for contracts signed on or after 21 October 2024 and before 21 April 2027. It covers eligible strata lots with common property, including apartments, units and townhouses; it does not cover a house-and-land package outside such a strata subdivision. Investors, companies and trusts can qualify, without a property-value ceiling. The standard concession continues separately. Confirm all transaction conditions before estimating savings.

Ask the conveyancer about the completion and settlement triggers, variation rights, notices, deposit custody, sunset provisions, defects and finance conditions. Ask the broker what happens if the eventual valuation is lower, income changes or an early approval expires. A loan shortfall does not automatically release the buyer from a purchase contract. Keep a contingency budget for a longer wait and additional cash requirements.

Consumer Affairs Victoria also explains a purchaser’s right to end a contract if subdivision registration misses the contractual time or the default 18 months. Get advice before exercising any right. That is different from automatic cancellation on a general construction deadline.

Related original articles: Buying privately or through a dealer and Funding getting married. Public Natloans contact: 1300 955 791.

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