How to buy an apartment off the plans

More Kiwis are catching on to the benefits of buying a new apartment off the plans — without having set foot inside.

The idea might sound risky to a generation raised with open homes, builders’ reports and back-and-forth negotiations between buyers and sellers. But, with the rising rate of new builds across the country — particularly in Auckland — buying off the plans is becoming a popular way to get on the property ladder.

NZ Living Director Shane Brealey says tech-savvy home buyers are more comfortable “shopping with their fingertips” online without seeing the product — as long as they have sufficient information to make an informed decision.

Buying off the plans means agreeing to purchase a property yet to be built, based upon detailed plans from the builder or developer.

There are many benefits to buying a new apartment off the plan, the main one being that you purchase at today’s price. If the housing market continues to rise, you’ll already have equity in your home by the time you take ownership of it a year or two later.

Most deposits are only 5-10 per cent of the purchase price, giving more time to keep saving and get your finances in good health while the home is being built – although you will need to get mortgage pre-approval from your bank for the full purchase price.

You also have the benefit of knowing the price up front, rather than entering the competitive and uncertain environment of an auction or multiple offer situation.

First-home buyer Sophie recently moved into a new apartment in Northcote Development’s Fraser Avenue after buying it off the plans a year ago. She says it was a “little scary” at first, but the new home has exceeded her expectations.

“When I went to the pre-settlement inspection, where I actually got to see the apartment for the first time, all my worries were gone. It was better than I could have expected.”

To have a similar positive experience, it’s important to do your homework and understand how the process works.

Kāinga Ora has trusted builder partners who use a variety of tools to help you envisage your new home, including renders (artists’ impressions) of the interior and exterior of the property and floor plans with specific dimensions; some even offer 3D virtual tours that allow you to “look around” the apartment on your device.

There may be an opportunity to visit a display suite, often on or near the building site, where you can see examples of some of the interior fittings and finishing. For extra peace of mind, you can visit — or at least drive by — one of the developer’s most recently completed projects to get a feel for the style and quality.

The builder should also provide specifications for the interior of the apartment, including construction materials and fittings and appliances, so you know exactly what you’re buying.

All new builds in Kāinga Ora-led developments must achieve 6 Homestar – meaning they have greater insulation, moisture control, and water efficiency measures than those required by the New Zealand Building Code.

When it comes to interior colour schemes, you will usually get to choose between two different themes (lighter or darker), put together by an interior designer.

Sophie says buying off the plans gave her time to think about how she would put her own stamp on the apartment while it was being built: “I had plenty of time to pre-plan. I had Pinterest boards and was slowly buying pieces. It’s so important to be smart about space.”

It’s also important to ask your builder about parking as sometimes it’s included with the apartment, sometimes you have to pay extra and other times there’s none available.

Buying an apartment typically involves joining a body corporate, a useful way of managing the maintenance of shared spaces within your building. A body corporate comes with annual fees, covering things like building insurance and often includes set rules about things like pets and parties.

Body corporates, specification sheets and deposits might sound overwhelming but, when it comes to buying off the plans, everything you’re agreeing to will be included in the contract. Read it carefully and have a solicitor look over it.

All in all, it’s a great way to secure a brand new, high-quality home at today’s price with the added benefits of time to plan, save, and hopefully lock in some equity before your move-in date.

- This content was supplied by Kāinga Ora