Buying off-the-plan can be split up into different sections on a purchasing time-line.
Here, and firstly, we will highlight some of the most common terms heard when researching an off-the-plan development.
In order to preserve the security of your chosen apartment, a deposit, that is most commonly around 10%, is needed. This deposit is payable by cheque or funds transfer and doesn't have to be paid until contracts have been exchanged between the developer and the purchaser. This deposit is usually held by the developer's solicitor in a trust account. Usually interest is given to the developer, but this can be negotiated.
Owners Corporate Fees/Levies
Building management and regulation costs money and time, therefore the Owners (as a collective) in a strata plan must obligate to paying fees to the Owners Corporation. These fees are usually paid quarterly, biannually or annually (as decided by the Body Corporate). Additional levies are decided and assigned by the Administration and Sinking funds.
The fees and levies may vary and may be higher if your apartment building has pools, gyms, lifts and concierges. Levies can range from a few hundred to a few thousand per quarter. Importantly, there may be more than one strata fee per apartment.
When you negotiate your contract, any extra or additional conditions will be cited, listed and labelled under a Special Conditions paragraph in the contract. These conditions aren't usually the conditions required by law.
These are specifications, items and additions that specified in the contract that may refer to things such as wardrobes (built-in), dishwashers, fridges, laundry facilities, cook tops etc.
This refers specifically to utilities such as pipes, conduits and mechanical service areas that are designed to keep the building running.
Gross Rental Yield
This, often abbreviated to GRY, is used to compare and define your investment return that is usually calculated by dividing the annual rental income by the property's value and purchase price at the time of purchase.
Done in a similar way to capital growth, and in direct reference to the change in value of your investment over a period of time. This will help the investor understand how much value their investment has grown and increased by, as well as if it will continue to grow.
As you would have seen, real estate agents calculate the vacancy rate by dividing the vacant rental properties available by the amount of rental properties they have. If an agency has 10 properties, and 2 are vacant, then the vacancy rate is 20%.
This refers to the completion time of the apartment. From here on, and once this occurs, the new owner can move in to the property. Specifically, for off-the-plan sales the settlement/completion time is usually decided and stated as a number of days after the registration of the Plan of Subdivision or Certificate of Occupancy.