For many people buying a home or an investment property is one of the biggest financial decisions that they will make in their life. It is important that purchasers understand what they are buying, and what protections are available to them.
Apartments are certainly a popular purchase in Sydney generally and Penrith specifically, and a number of developers are selling apartments either off the plan or as new, with no one having occupied the apartment before. There are some specific things to take into account when looking into these purchases.
Home Owners Warranty
If you are purchasing a strata property in an apartment block that is more than three stories high, then it is worth noting that the developer is not required to take out Home Owners Warranty insurance over the property. While there are many complaints about the Home Owners Warranty insurance scheme (mainly that it is length, expensive and difficult to access) the alternative of having no insurance for serious building defects is far less attractive.
One problem that can often arise is that by the time that the owners become aware of a serious building defect, the company that was responsible for the development no longer exists. This is often not because the company has gone broke, but rather the company was set up only for the purpose of that singular development. This can make it more expensive, or indeed impossible to force the original developer to rectify the building defect. If this is the legislative environment that the NSW developers are operating in then obviously there is a high risk to the potential purchaser. If you are purchasing a new apartment it is vitally important that you do all the searches and investigations, and don't just assume that because it is new it will be in better condition than an established apartment block.
As part of the recent changes to the first home owner's stamp duty exemption, investors 'of any kind' buying off the plan will no longer be able to delay the payment of stamp duty on their property. While the legislation has not yet been proposed or finalised and so it is difficult to advise on the details of this change, if you are looking to buy an apartment as an investment either now or in the future it would be wise to either wait for the legislative changes, or ensure you have the cash now to pay the stamp duty.
The language being used by the government would suggest that there will be requirements not only for the purchaser to live in the apartment but also requirements as to when and for how long you must live in the apartment to get the benefit of deferred stamp duty. It is important that you get proper legal advise and ensure that you know what your costs are, and when you will have to pay them.
What should I do?
Before you purchase your apartment or sign a contract you should really come and speak to Bruce Coode so that you understand your rights if you are purchasing an apartment off the plan vs purchasing an existing apartment or a house. You may need to add some costs to your budget, or you may decide that it is better for you to look at a development less than three stories like a town house.
Bruce has been acting for clients buying and selling property for forty years and understands more than just your basic conveyance. He has acted for Councils, for parties seeking development approval from councils, and he has taught real estate law at universities. He has assisted clients in relation to their strata law issues, including dealing with building defects, and he understands what is involved in fighting about these issues.
If you would like more information about our firm, or about purchasing real estate, then click on the blue button to read some more of our articles on this topic.