Buying Off-the-Plan in Australia: Stamp Duty Savings, Risks and Finance Pitfalls

Buying off-the-plan has become an increasingly popular path into Australian property, particularly for first-home buyers and investors looking to secure a brand-new property at today’s prices.

But it’s not without its complications. Before you sign anything, here’s a clear-eyed look at how off-the-plan purchases work, where the benefits are, and what can go wrong.

What Does Buying Off-the-Plan Actually Mean?

Buying off-the-plan in Australia means purchasing a property, most commonly an apartment, unit, or townhouse, before it has been built. 

You’re buying based on architectural plans, renders, and a display suite rather than an existing home. You pay a deposit upfront, usually around 10% of the purchase price, and pay the balance when construction is complete and settlement occurs.

The time between signing contracts and settlement can range from one to three years, sometimes longer. That gap is both the opportunity and the risk.

The Off-the-Plan Stamp Duty Concession: What You Need to Know

One of the most significant financial benefits of buying off-the-plan in Australia is the potential stamp duty saving. In several states, off-the-plan purchases attract reduced stamp duty because the duty is calculated on the land value alone, or on the contract price minus the construction component, rather than on the full completed property value.

In Victoria, for example, eligible buyers may qualify for a stamp duty concession on off-the-plan purchases. First home buyers in Victoria may qualify for a full stamp duty exemption on properties valued up to $600,000, with a concession applying on properties valued between $600,000 and $750,000. Use our VIC stamp duty calculator to work out your potential savings before you commit.

Stamp duty rules vary significantly by state and change periodically, so always check current eligibility requirements and get advice specific to your situation.

Other Benefits of Buying Off-the-Plan

Beyond the off-the-plan stamp duty concessions, there are other genuine advantages worth understanding.

Time to save

The construction period gives buyers more time to build their savings, reduce debt, or improve their financial position before settlement.

Brand new property

Off-the-plan buyers receive a property built to current building codes with modern finishes, no maintenance history, and potentially strong depreciation benefits for investors.

Locking in today’s price

If property values rise during construction, you could find your property is worth more than you paid for it by the time settlement arrives, reducing your effective LVR.

First Home Owner Grant eligibility

In many states, eligible first home buyers purchasing a new property off-the-plan may qualify for the First Home Owner Grant, which can provide a meaningful financial contribution towards purchase costs.

The Real Risks of Buying Off-the-Plan

The risks of buying off-the-plan are real and worth taking seriously before you sign a contract.

Property Values Can Fall

The same mechanism that can work in your favour, locking in today’s price, can work against you if values decline during construction. If your property is worth less at settlement than you contracted to pay, your lender will only finance based on the lower valuation. 

You’d need to cover the shortfall in cash or risk not being able to settle at all.

Finance Conditions Change

Your financial position and lender appetite can both change significantly between signing contracts and settling. Pre-approval obtained at the time of purchase is not a guarantee of finance at settlement. Interest rate changes, a change in employment, or tightened lending conditions can all affect whether your loan is approved when you actually need it.

Working with a home loan broker throughout the process, not just at the start, helps you stay on top of your financial position as settlement approaches.

The Finished Product May Differ

Developers can substitute finishes, fixtures, and fittings for comparable alternatives without breaching the contract, depending on the contract terms. What you saw in the display suite may not exactly match what you receive. Your contract should specify inclusions in detail, and having a conveyancer review it before you sign is non-negotiable.

Construction Delays and Developer Risk

Delays are common in off-the-plan builds. Supply chain issues, labour shortages, and council approval timelines can all push settlement back significantly. Most contracts include a sunset clause that sets a deadline by which the property must be completed. If the deadline passes, buyers may be entitled to exit the contract and receive their deposit back.

Developer insolvency is a less common but serious risk. Before signing, checking the developer’s track record and completed project history is essential due diligence.

Finance Pitfalls Specific to Off-the-Plan Purchases

Beyond the general risks, some finance-specific risks catch buyers out.

• Bridging finance needs: If you’re buying off-the-plan while also owning an existing property, the timing of your settlement can create a gap that requires bridging home loan finance. Our brokers can help you plan for this well in advance.
• Relocation timing: Buyers who need to be in the property by a specific date for work or family reasons can find themselves in difficulty if construction is delayed. A relocation home loan may offer some flexibility in these situations.
• LVR reassessment at settlement: Your lender will revalue the property at settlement, not at the time you signed the contract. If the market has moved, your approved LVR may no longer cover the contracted purchase price.

What to Check Before You Sign

If you’re seriously considering buying off-the-plan, work through this list before committing:

Research the developer’s track record thoroughly, including completed projects, delivery timelines, and any history of disputes or insolvency proceedings. Visit completed developments in person where possible.

Have a solicitor or conveyancer review the contract in full. Pay close attention to inclusions, substitution clauses, sunset clause terms, and what happens if settlement is delayed.

Understand the stamp duty position for your state and buyer type using our VIC stamp duty calculator or the relevant state calculator.

Speak to an Inovayt broker about your finance structure early, ideally well before settlement, rather than at the point of purchase.

Is Buying Off-the-Plan Right for You?

Buying off-the-plan in Australia suits buyers who don’t need to move in immediately, are comfortable with a degree of uncertainty around the finished product, and have the financial buffer to handle a potential valuation shortfall at settlement. For first home buyers chasing a stamp duty concession and a brand-new property, it can be a smart path. For investors, the depreciation benefits and rental yield on a new property can be compelling.

The key is going in with clear eyes and the right professional support around you.

Speak with an Inovayt mortgage broker before you sign off-the-plan. We’ll help you understand your financial position, settlement plan, and make sure you’re not caught out when it matters most. Your first consultation is completely free.