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What does buying off the plan mean?
How does Urban Concepts work?
What are mixed-use developments?
Deposit Bonds
What happens to my deposit?
Can I buy and sell before settlement to make
some 'quick money'?
Are there any advantages in buying a property
in a company name as opposed to an individuals name?
What is stamp duty and when is it due?
What other costs are involved when buying off
the plan?
What do strata fees cover?
Are there any tax savings?
Can I choose my own finishes?
Is there a building warranty?
What if the building doesn't go ahead?
Defects period
Does the first home owners grant apply?
What does buying off the
plan mean?
Buying off the plan is becoming more common in Western
Australia. It is a widely accepted way of buying property
in the Eastern States and in other countries however in WA,
the market is only just beginning to realise the benefits
of purchasing property in this way.
When you buy off the plan you commit to a property before
it is built. In the case of Urban Concepts, you pay an upfront
10% deposit and then when the building is completed (usually
12 months later) the remainder is due.
The benefits of buying off the plan are:
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You pay a lower price because the developer
offers discounts to achieve a certain amount of pre sales
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You lock in at the initial and lowest
price. This is a fixed price which includes all the finishes
and fittings as outlined in the contract |
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In most cases, by the time the development
is built, it is worth more than the original, off the
plan price |
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You only pay a 10% deposit with the remainder
not due for 6-12 months |
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You can customise the interior to suit
your requirements and taste |
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Many of our buyers use deposit bonds*
if they do not have access to the deposit straight away |
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How does Urban
Concepts work?
The start of the process is finding a site to develop.
Urban Concepts’ formula is to select a location in a
prime inner city area where there is low supply of land and
therefore developments, yet a proven high demand for this
type of accommodation.
Once the site is located, a concept is created based on what
market research tells us will work
on that particular site. The proposed development must enhance
the area in which it is located and ultimately enhance the
lifestyle of the people that will inhabit it.
Once the concept is created and has been deemed feasible,
an architect is commissioned to develop a scheme. Then, when
all the requisite approvals are in place we go to the market
and aim to sell the individual properties off the plan.
We specialise in boutique developments…
ie developments that comprise 25 units or less. One of the
problems with large developments is the inability to create
a point of difference. Should the property market take a downturn
there can be a large amount of properties for sale or for
rent and the market will determine the ultimate selling price.
In a buyers' market this could mean a substantial discount
to the asking price.
A word on capital growth…
We tend to steer away from developments in the inner city
where there is a large supply (if not an oversupply) of apartments.
We look for areas that have long term capital growth where
demand is greater than supply because the capital growth of
a property increases when there is scarcity.
The areas we look for are near to the city suburbs that are
either established or emerging. These tend to have a balance
of development to ‘green space’ with major amenities
such as banks, a post office supermarkets, shops, schools,
train and bus systems and so on.
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What
are mixed-use developments?
Mixed-use developments are those that
combine commercial and residential spaces within the one complex.
In most of our developments, offices and retail spaces occupy
the ground floor areas with apartments on the upper floors.
For example, in our Quorta development in Subiaco, there are
6 commercial suites on the ground floor facing Rokeby Road
that house a shop, medical suites and offices. On the second
and third floors there are 12 apartments. At the rear of the
development there are 9 two and three level terrace houses.
The advantages of mixed-use developments are:
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Increased security - during the day the commercial suites
are occupied and at night the residences are occupied.
This means increased surveillance for your property. |
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Increased street activity and interest - mixed-use developments
add atmosphere and street life which many people are seeking
as an alternative to the traditional suburban lifestyle. |
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Convenience – living in an inner city location
means residences and offices are conveniently located
near all amenities, restaurants and cafes, schools, universities,
freeway, bus and train systems and so on. |
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The “home office” and “tele-commuting”
concept - many people are also attracted to the
idea of combining their living and working spaces...ie
occupying an office and living above in an apartment. |
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Deposit Bonds
Deposit bonds act like an insurance bond in the case
of purchasing property. If a potential buyer does not have
access to the 10% deposit that is required to buy an Urban
Concepts’ property, we will happily accept a deposit
bond as payment of the deposit.
These can be easily organised through a financial adviser
or institution. Deposit bonds incur a minimal fee but essentially
they enable a buyer to secure a property immediately rather
than in 6 months time when the price of the property may increase.
The purchaser needs to provide evidence of income, assets
and liabilities.
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What happens to
my deposit?
When you buy an Urban Concepts property, your deposit
goes to a nominated settlement agent – it does not go
to us. The settlement agent holds your deposit in trust. It
can be arranged that your deposit goes into an interest bearing
account so that you get the benefit of interest over the term.
It may only work out to be a small amount but your money may
as well work for you while it is in trust.
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Can I buy and
sell before settlement to make some ‘quick money’?
Some people ask if they can buy off the plan and then
sell at settlement (ie when the building is completed) to
make some money quickly. This can be done and is perfectly
legal however, in Western Australia stamp duty is payable
prior to settlement. Often there is a substantial capital
increase between pre-construction and settlement. Smart investors
use this equity wisely by utilising their increased borrowing
power towards their next investment property. We recommend
that buying off the plan – as is the situation for buying
any property, is of greatest benefit when it is a medium to
long term investment. This is not to say property can not
be a short term investment, rather, it is a better investment
if it is medium to long term.
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Are there any
advantages in buying a property in a company name as opposed
to an individual’s name?
In Australia the maximum company tax rate is 42% while the
maximum personal tax rate is 47% so in some circumstances
the use of a company structure may be warranted. A professional
accountant or qualified and licensed financial planner should
be consulted to ensure the appropriate structure is used.
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What is stamp duty and
when is it due?
Stamp Duty is a tax or duty that must be paid on all
property bought within the state of Western Australia. It
is charged by and payable to the Office of State Revenue. For off the plan purchases stamp duty is not payable until the strata title issues at completion of the development.
For more information, click through to the stamp duty section
on the Department of State Revenue’s website
http://www.dtf.wa.gov.au/cms/osr_content.asp?ID=178
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What other costs are
involved when buying off the plan?
As discussed above, to buy an Urban Concepts property
the deposit is payable on signing a contract with the balance
not due until building completion, settlement and hand over
of title.
Cost of property (including GST) plus:
• Stamp duty (one of payment)
• Land tax
• Council rates
• Strata fees
• Electricity, gas, water etc
These costs are the same whether you buy off the plan or
your buy an existing property with the exception of strata
fees.
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What do strata fees cover?
Strata fees are charged to all owners on a quarterly
basis by the strata manager (who is appointed to manage the
complex).
Strata fees cover building insurance (owners need only arrange
their individual contents insurance), common electricity,
pest control, common water consumption, general cleaning and
cleaning materials, maintenance and repairs of common areas,
common garden maintenance, management fees to the strata company
and so on.
These are calculated proportionately to the strata area purchased.
With each development a council of owners is appointed to
oversee the running of the complex to ensure that budgets
are adhered to and the complex is appropriately managed.
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Are there any
tax savings?
New buildings can qualify for significant tax depreciation
savings. Investors (as opposed to owner occupiers) are entitled
to these tax benefits. For each development, Urban Concepts
will commission a Quantity Surveyor to compile a building
depreciation schedule. The Quantity Surveyor is familiar with
the different depreciation rates applicable on the different
components of the total building. Properties bought for investment
may allow the owner to claim any loss on the investment against
other income earned. This is commonly known as ‘negative
gearing’. Buyers should seek independent advice on this
as the circumstances will differ with each different development.
Urban Concepts can put you in touch with experts in the areas
of taxation and depreciation.
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Can I choose
my own finishes?
When buying off the plan, purchasers have the opportunity to customise the interior of their apartment within the structural constraints of the building. For each project we appoint interior designers to put together several colour schemes using the latest textures and finishes on the market. Purchasers are then invited to choose a colour scheme for their apartment. A Schedule of Finishes for each apartment is also available detailing fixtures and fittings and whitegoods.
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Is there a building
warranty?
Builders that work with Urban Concepts are required to provide
a six year structural warranty.
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What if the
building doesn’t go ahead?
If for some reason, the development does not go ahead, your
deposit will be repaid to you in full.
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Defects period
Every project has a 12 month defect period from the point of building completion. In this time, if anything goes wrong in
your apartment ie the oven doesn’t work, cracks appear
in the walls etc the builder will repair and make good. To
this effect, retention monies are held ie the builder and
sub contractors are not paid in full until the 12 month period
is up.
All new buildings need 6 to 12 months to settle. This is one of the reasons why a defects period is provided.
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Does the first
home owners grant apply?
If you are eligible for the First Home Owner's Grant it does apply. For more
information, click through to the First Home Owners section
on the Department of State Revenue’s website http://www.dtf.wa.gov.au/cms/osr_content.asp?ID=344
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