Buying off the plan – Caveat emptor
Being in property advisory I often get asked by friends and colleagues if I have heard of some small (fancily known as boutique) developer for their reassurance before they commit to buying a unit ‘off the plan’.
In 2010 when I was personally looking for investment units there would be 2 or 3 adverts in the Domain pull out of new developments – I looked this weekend and as is common right now, on almost every other page there is a new unit block, by a developer I have not heard of before.
It is no coincidence in my opinion between the significant rise in reported apartment building defects and the quantum of active developers. A recent report by Engineers Australia is stating that 85 percent of NSW units are completed with defects and another states that 40 percent of Victorian property owners have suffered loss due to defects. Regardless of the reports, my sister-in-law has just been issued a $25K special levy to pay for defects on her 4 year old, two-bedroom unit block.
The first advice I give is to ask who the builder is – although finding out can be difficult as the selling agents rarely get asked or find out. They tend to say the developer is the builder – this generally means that the builder will be getting trades or sub-contractors rather than appointing a principle main contractor.
Secondly, go and walk through and see what their other completed developments look like. Get a feel for the quality and where possible read the strata plan minutes that will be up on the lobby wall – you will clearly see if ‘building defects’ are a regular agenda item. Sounds like a lot of hard work but I can assure you it can be an eye opener.
Finally, if your budget permits try and stick with the big end of town – tried and tested developers who have billions riding on their reputation will be doing all they can to ensure there are no defects, and any that do come about are dealt with swiftly.
At the end of the day remember, buyer beware.