Buying off the plan: the risks and what to watch for

Buying off the plan means committing to a property that does not exist yet, on the strength of plans and promises. It can work well, but it carries risks that buying an existing home does not. NSW law now gives off-the-plan buyers extra protections. This guide explains the risks and the protections, and what to check before you sign.

What buying off the plan means

Buying off the plan means entering a contract to buy a property, usually an apartment or a house and land package, before it is built or the plan is registered. You sign and pay a deposit now, and settlement happens later, sometimes years later, once construction is finished and the plan is registered.

The attraction is getting into a new property, sometimes with a longer run to settlement to save, and potentially with duty or grant benefits for a new home. The catch is that you are committing a long way ahead to something you cannot yet inspect, and a lot can change between signing and settlement.

The real risks

The risks of buying off the plan are different in kind from buying an existing home. The main ones are these.

• The finished product may differ from what you expected. Finishes, sizes, and layouts can change within the limits the contract allows, and the real thing may not match the display suite or the render.
• Long settlement, changing circumstances. Between signing and settlement, your finances, interest rates, or the market can change. If the property is worth less at settlement than you agreed to pay, or your borrowing capacity has fallen, you can be caught.
• Developer delay or failure. The project can be delayed, or in the worst case the developer can run into trouble, leaving the project stalled.
• Deposit exposure. Your deposit is tied up for the length of the project.
• Sunset clauses. A sunset clause lets the contract end if the project is not finished by a set date. These have been misused in the past by developers to cancel contracts and resell at a higher price.

None of this means off the plan is a bad idea. It means it is a different risk profile, and it needs to be understood before you sign, not after.

The protections NSW law gives buyers

NSW strengthened the protections for off-the-plan buyers, and they matter. The key ones are as follows.

• Disclosure statement. The vendor must attach a disclosure statement to the contract, including key documents such as a draft plan prepared by a registered surveyor and, depending on the scheme, draft by-laws and a schedule of finishes. If a required disclosure statement is not attached before you sign, you may be able to rescind within 14 days of exchange.
• A longer cooling-off period. The cooling-off period for off-the-plan contracts is 10 business days, double the 5 business days for an existing home, giving you more time to get advice and finalise finance.
• Material changes. If the vendor makes a material change to what was disclosed, you may be able to rescind, or claim compensation of up to a set percentage of the price, within a set time of being notified.
• Sunset clause protection. A developer generally cannot use a sunset clause to end an off-the-plan contract without your agreement or an order of the Supreme Court, which was introduced to stop the misuse of sunset clauses.
• Deposit held in trust. Your deposit and any instalments must be held in a trust or controlled money account during the contract, and cannot be released to the developer before settlement.
• The registered plan before settlement. The developer must give you the registered plan and associated documents a set time before settlement, and you cannot be forced to settle within that period.

These are real protections, but they work only if the contract is reviewed and the deadlines are observed, which is where advice comes in.

What to check before you sign

When we review an off-the-plan contract, the areas we focus on include the disclosure statement and the plans, the schedule of finishes and what the developer can change, the sunset date and the sunset clause terms, how and where the deposit is held, the estimated and long-stop completion dates, the strata documents including draft by-laws and levies if it is an apartment, and your finance position given the long settlement. There is a separate article in this series on the strata reforms, which matter if you are buying an apartment.

The single most important piece of advice we give off-the-plan buyers is to have the contract reviewed before you sign. These contracts are long, developer-drafted, and weighted towards the developer. Understanding what you are committing to, and what can change, is the difference between a good purchase and an expensive surprise.

How we help

We review off-the-plan contracts in detail, explain the risks and the protections in plain English, negotiate terms with the developer's lawyers where we can, and guide you through to settlement years later, including checking the finished product and the registered plan against what you were promised. Off the plan can be a good buy, but it is a long commitment with real risks, and it rewards careful advice up front.

Frequently asked questions

What is the cooling-off period for an off-the-plan purchase? 10 business days, which is longer than the 5 business days for an existing home.

Can a developer cancel my contract under a sunset clause? Generally not without your agreement or an order of the Supreme Court. The law was changed to stop developers misusing sunset clauses.

Is my deposit safe? Your deposit must be held in a trust or controlled money account during the contract and cannot be released to the developer before settlement.

What if the finished property is different from what I was promised? If there is a material change to what was disclosed, you may be able to rescind or claim compensation within a set time. Get advice quickly if this happens.

Keep reading

• Property and conveyancing
• The contract for sale of land: what to check before you sign
• NSW strata reforms 2025 to 2026: what owners and buyers need to know

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.