11 Reasons to Buy an Off the Plan Townhouse
Have you thought about buying an off-plan townhouse?
Doing this can be a great way to get into the crowded housing market. A foot in the door is worth it in the long run.
Yet, there is much to consider if you’re thinking about buying off the plan, whilst perusing the Melbourne townhouses for sale.
It’s a little bit different to buying an established property.
All you have to go off is project marketing, which you can learn more about here.
Luckily, in this article, we’ll share 11 reasons why buying an off-the-plan townhouse is a great idea.
You may expect to read some of the reasons, but hopefully, some of them will also be new information. And here is some real estate motivation to boot!
So, read on to discover all there is to know about this topic.
1. Move Into a Brand New Home
Should you buy a townhouse – one of the main reasons people buy off-the-plan townhouses is that you are guaranteed to move into a brand-spanking new home.
Literally, every element of the home is brand new. From the flooring, the walls, the windows, the appliances, the fixtures and fittings, everything.
This means that there will be no wear and tear on any element of the home.
If you buy an existing property, particularly an older home, there is often lots of work to make the home livable. Some even require complete renovations before they are up to an acceptable standard.
With a new, off the plan townhouse, you don’t have to renovate, re-do flooring, remodel your kitchen and bathroom or even paint. Every single thing is new and ready to move in.
This is a massive plus for some home buyers.
Let’s explain it in a bit more detail.
Let’s say you buy an existing property for roughly $900,000. Either mortgaged or outright, that is a large sum of money.
Now, because the value tends to be in the land, not a home, you may need an extra $50,000 to $100,000 worth of renovation work to make the home comfortable to live in.
Now, if you spent a similar amount (the $900k) on a brand new, off the plan townhouse, you don’t have to sink any extra money into the home.
You could use the savings to acquire some lovely new furniture, or a home entertainment system. Or just bank it and save it for a rainy day.
2. Stamp Duty Savings
The second reason you should buy an off the plan townhouse is that you will see significant stamp duty savings.
Stamp duty is a tax that you pay the government when you purchase real estate. Often, off the plan properties offer a decent discount on stamp duty.
This could see you saving tens of thousands of dollars compared to purchasing existing real estate.
Now, the savings will vary from state to state in Australia. It’s worth researching your state and seeing what is on offer.
3. New Home Buyer Grants
Buying off the plan property means that you could be eligible for new homeowner/buyer grants.
Often these government grants are only applicable if you buy new or off the plan property.
Again, this varies from state to state, but on average, you could see a saving of 10,000 dollars to purchasing an off the plan property.
Imagine what you could do with that sort of spare money. It could make a perfect moving-in present for yourself. Or again, as we suggest above, could be put towards furnishing or decorating your new home, or upgrading things like window dressings.
4. Tax Benefits – for Investment Properties
If you happen to buy an off the plan townhouse as an investment property, you could see decent tax benefits.
This is because you can claim a depreciation schedule against your taxable income for each financial year.
In short, this means you can claim a percentage of construction costs for your new investment property. Which means your taxable income is reduced.
This is particularly useful if you have income from work in addition to rental yields. You could see a tax refund if you are lucky (and if you have a good accountant). Or, if you wind up with a tax bill, the depreciation on your investment property can reduce the amount payable to the ATO. Which is always a good thing.
5. Higher Rental Yields
Again, if you’re buying off the plan as an investor, another advantage is that you can ask for a higher rental price than older properties. The home run is a positively geared investment out of the gate.
Renters prefer new, functioning homes to older, rundown houses.
A new townhouse is appealing to renters, who are often younger professionals waiting for their turn to enter the market.
This means you can ask for more rent for a new townhouse than a neighbouring older property. There are many other reasons buying a townhouse as a rental property makes sense.
The next point will demonstrate that it requires more upkeep and repair work than a new home.
6. Fewer Repairs and Maintenance are Required at First
Another proven benefit if you buy a townhouse off the plan is that you are usually set for a few years for any repairs or maintenance on your home.
An existing property will have issues present all the time, from roof leaks to appliance breakdowns. Also, blocked drains and other plumbing issues are common, as well as needing regular maintenance to keep the home in good order.
Now, a new townhouse purchased off the plan will still require maintenance. However, you’re usually right as rain for a few years.
For instance, carpet needs replacing every five to ten years, depending on wear and tear. You also need to clean your gutters. Appliances like dishwashers and climate control systems can also give up the ghost after five or ten years.
When you buy an existing property, it’s a complete roll of the dice to guess when the previous owner performed the above tasks. Within a year, you could move in and need to replace the heater and the air con. Then you need to patch a hole in the roof, replace carpets, and repair the dishwasher. This adds up in terms of cost.
With a new, off-the-plan townhouse, you are guaranteed a few working years for your appliances and new carpet, roofing, and other elements of the home.
In addition to this, your appliances in an off-the-plan townhouse will come with their manufacturer’s warranty. So, you’re covered if things break within a year of moving in.
7. Lower Energy Bills
Newer homes are constructed with energy efficiency in mind. This means they are properly insulated (in the roof and walls). Depending on the season, they have other design elements that help the home keep the cool/warm air inside.
Older homes are often poorly insulated, if at all, and can see homeowners rack up huge energy bills in peak times (usually winter and summer).
With a new, off-the-plan townhouse, you will spend less than the average person on heating and cooling your home.
8. Capital Gain Potential
Furthermore, when buying an off-the-plan townhouse, you could see significant capital gains by the time you move into your new home.
For instance, if you purchase your off-the-plan townhouse for $800,000 and then wait a year for construction to complete, you may see a rise in value.
This will depend on the area and the market, but in the above example, your new home may be worth an additional 20 or 30 per cent on top of what you paid for it.
This means that you wind up with equity in your house, which you could leverage for additional borrowing power. For instance, you can use equity to purchase an investment property or a boat or caravan, if you’re the outdoorsy type.
Do not underestimate the benefit of capital gains when buying off the plan.
9. Gives You Time to Prepare
Often buying off the plan means putting down a deposit, usually 10 or 20 per cent, and then settling the remaining costs upon completion of your new home.
This means you have a year to save your money, compared to purchasing an existing property and needing to start paying your mortgage immediately.
You can use the saved cash for anything you want. Again, you could put money into the home in terms of furniture, entertainment systems or other toys. You could go on holiday. You could even pay it into your home loan, reducing your payments and giving you available redraw as savings you can use when you need it.
We often see young people living at home while they wait for their off the plan property to complete in this situation – they can save money quickly and start off in a better position once they move in.
10. Locked-in Price
Buying a townhouse off the plan means you pay a locked-in price compared to an existing property.
With an existing property, the auction may determine the house’s value, which can vary hundreds of thousands of dollars from the estimated price, depending on how hot the auction action was on the day.
Whereas an off the plan property is a set price. You pay your deposit and sign a contract that states the final amount. If the property value rises a year later, that benefits you as the buyer, not the seller. We detailed above the capital gains potential of buying off the plan.
This is a significant reason to buy a townhouse off the plan.
11. Some Customisation Offered
Another significant benefit is that buying off the plan means you can customise some elements of your new home.
The main design and layout are usually consistent across the properties.
However, you can change elements such as flooring types, fixtures and fittings (such as tapware) and sometimes even appliance brands and other home elements.
When you buy an existing hone, it is the luck of the draw with the above elements. Often you will spend even more money to get your preferred fixtures and fittings.
Summing Up
In this helpful article, we’ve shared eleven reasons to buy an off the plan townhouse.
To summarise, you should buy an off the plan townhouse for the various reasons we’ve listed above.
You’ll save money while you wait for the construction to finish, you’ll save money on heating and cooling, and you’ll save money as the price is locked in.
For landlords, there are tax benefits to buying new real estate. You’ll take advantage of government grants for new home buyers because you’re buying a new property. And there are also decent stamp duty savings when you buy off the plan.
There’s nothing quite like moving into a brand-new home, with everything sparkling, pristine and untouched.
If you are a buyer check out these townhouse buying tips – you’ll learn why you should buy a townhouse including what to ask when you do.
If you are a seller or are interested in how to sell real estate of the plan click here.
And finally, if you are looking for a real estate marketing business to help, we can help – don’t hesitate to reach out we would love to hear from you.
