How to Buy an Off-the-Plan Property as a First Home Buyer

What Off-the-Plan Means for First Home Buyers

Off-the-plan means you sign a contract before the property is built or titled. You commit to a price now and settle once construction is complete, which can be anywhere from six months to three years depending on the development. That delay creates both opportunity and risk, especially around finance approval and settlement readiness.

For ADF members posted to Canberra, off-the-plan apartments in Forrest or nearby precincts offer access to well-located housing without competing for established stock in a tight market. New developments near the parliamentary triangle are often aimed at professionals and public servants, which includes defence personnel working at Russell Offices or across the inner south.

How the Deposit Structure Works

You pay a deposit when you exchange contracts, typically 10% of the purchase price. That deposit is held in trust until settlement. You do not need loan approval at the time you sign the contract, but you will need it well before settlement.

Consider a buyer purchasing a one-bedroom apartment off-the-plan in a development near State Circle for $650,000. They pay $65,000 at exchange. That buyer then has 12 to 18 months to arrange finance, save any additional funds needed for settlement, and prepare for handover. If the buyer is using the Australian Government 5% Deposit Scheme, they would need $32,500 as the actual deposit to the lender, but the developer still requires the full 10% upfront in most cases. The difference can sometimes be funded through savings, family assistance, or a smaller personal loan depending on lender policy.

Some developers allow a staged deposit. You might pay 5% at exchange and the remaining 5% at a milestone such as slab pour or frame completion. Staged deposits reduce the upfront cash requirement but are not standard across all developments.

ACT Stamp Duty Relief for Off-the-Plan Purchases

From 1 July 2026, all first home buyers in the ACT are exempt from conveyance duty regardless of property value or household income. The previous property value cap and income threshold no longer apply. That means a first home buyer purchasing an off-the-plan unit in Forrest pays no stamp duty, even if the unit is valued at $700,000 or $800,000.

The ACT also offers a separate off-the-plan unit duty exemption for owner occupiers. This applies to unit-titled properties such as apartments and townhouses, with no property value limit. You must occupy the property as your principal place of residence for at least one year, starting within 12 months of completion. Both concessions can apply to the same purchase if you meet the eligibility criteria for each.

The combination eliminates a cost that would otherwise reach five figures on a mid-range apartment purchase. That saving can be redirected toward furniture, moving costs, or building a cash buffer for the first 12 months of ownership.

Loan Pre-Approval and Settlement Timing

Most lenders issue pre-approval with a validity period of 90 days. Off-the-plan settlements occur 12 to 36 months after contract exchange. Your pre-approval will expire long before settlement, so you need to reapply closer to the completion date.

Lenders reassess your financial position at the time of formal approval. If your income has dropped, your debts have increased, or lending policy has tightened, you may no longer meet the criteria. That risk is higher for ADF members who change postings, reduce overtime, or take parental leave between contract and settlement.

Secure loan pre-approval before you sign the contract. That confirms you can borrow the amount required based on your current circumstances. Update your broker six months before the expected settlement date so they can begin preparing your formal application and identify any issues early.

Valuation Risk at Settlement

The lender orders a valuation once construction is complete. If the valuation comes in below the contract price, the lender will only lend against the lower figure. You need to cover the shortfall in cash.

In a scenario where a buyer contracts to purchase a two-bedroom apartment for $750,000 and the valuation at settlement returns at $720,000, the lender calculates the loan amount using $720,000. If the buyer is borrowing 95%, the maximum loan is $684,000 instead of $712,500. The buyer must find an additional $28,500 at settlement or renegotiate with the developer, which is rarely successful.

Valuation risk increases in markets where prices are falling or where the development is significantly delayed. Forrest and the inner south have remained relatively stable, but no location is immune to valuation variance, especially in large apartment developments where comparable sales data can shift during a long construction period.

What Happens If You Cannot Settle

If you cannot settle, the developer can terminate the contract and retain your deposit. In some cases, the developer may also pursue you for the difference between your contract price and the price they achieve on resale, plus costs. The contract is legally binding, and walking away is not without consequence.

Some contracts include a sunset clause. This allows either party to terminate if construction has not reached practical completion by a certain date. If the developer triggers the sunset clause, your deposit is refunded in full. If you trigger it, the same refund applies, but only if the clause permits buyer termination. Read the sunset clause carefully before signing.

Using the First Home Owner Grant Alongside Off-the-Plan Purchases

The ACT does not offer a first home owner grant. The grant was replaced by the Home Buyer Concession in 2019. However, if you are purchasing off-the-plan in another state or territory and meet the eligibility criteria there, the grant can be claimed at settlement.

If you are an ADF member posted to Forrest but purchasing an investment property off-the-plan in another state as a future principal place of residence, confirm the residency requirements with the relevant state revenue office. Most jurisdictions require you to move into the property within 12 months of settlement and occupy it for a continuous period, typically 12 months. Posting cycles and deployment schedules can make that difficult to satisfy.

Fixed or Variable Rate for Off-the-Plan Purchases

You lock in your loan structure at formal approval, not at contract exchange. That means you choose between fixed and variable rates based on the market at the time of settlement, not the market at the time you signed the contract.

If you sign a contract during a period of low rates and rates rise significantly by settlement, your repayments will reflect the higher rates unless you fix. Fixing provides certainty but removes access to offset accounts in most cases. A split loan allows you to fix a portion for rate certainty and keep a portion variable with an offset for flexibility. Speak to your broker about home loan options that match your cash flow and risk tolerance.

Building Defects and Practical Completion

Practical completion is the point at which the builder certifies that construction is finished and the property is ready for occupation. Settlement usually occurs within 14 days of practical completion. You have the right to inspect the property before settlement, typically during a pre-settlement inspection scheduled by the developer.

If you identify defects during that inspection, document them in writing and notify the developer immediately. Minor defects such as paint touch-ups or loose fixtures are usually rectified after settlement. Major defects that prevent the property from being habitable may delay settlement, but the threshold for delay is high. Most contracts require you to settle even if minor defects remain, with the builder obligated to fix them during the defects liability period, usually 12 months.

Insurance coverage begins at settlement, not at practical completion. Arrange building and contents insurance before the settlement date. Some lenders require proof of insurance before they release funds.

How We Support ADF Members Buying Off-the-Plan

We work with ADF members purchasing off-the-plan across Canberra and other posting locations. Our role includes confirming your borrowing capacity before you commit to a contract, structuring your deposit to meet both developer and lender requirements, and managing the formal approval process as settlement approaches. We also coordinate with developers and conveyancers to keep settlement on schedule and flag any valuation or policy issues early.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions