Are you thinking of purchasing your piece of paradise within a new subdivision? Then here are 10 key things to consider:
1. Research
Research the costs to build (including survey costs, geotechinical reports, structural engineers etc).
2. Finance
Speak with your bank and understand the construction finance process. Understand what the lender’s requirements are for drawing down the loan. Documentation is often required to be provided within a very tight timeframe.
3. Covenants
There may be restrictions on your use of the land, building materials and timeframes for completion of the build.
4. Site Inspection
Consider earthworks that may be required, retaining walls, will your view be blocked by adjacent properties that have yet to be built. Try to imagine what the area will look like in the future once adjacent properties have all been constructed.
5. Issue of Title
If Title has not yet been issued, which is common with new subdivisions, then make sure your contract contains a sunset clause. The risk is that you may be waiting a long time for Title to be issued and have no ability to walk away from the contract.
6. Developer’s Delay in a Rising Market
Try to ensure that any cancellation under the sunset clause is only exercisable by yourself. We have seen in a rising market where projects are nearing the sunset date, that developers attempt to cancel the contract, with the aim of placing the land back on the market at a higher price.
7. Land Area
developers of new subdivisions often include provisions that enable them to change the land area of your property by as much as 5 per cent (and sometimes by as much as 10 per cent) without you having the right to cancel the contract. Instead, the purchase price is adjusted upwards or downwards. Will you still want to purchase the land if the area is smaller than you expected? Will you be able to pay for any price increase if the land area is larger than expected? With sections nowadays being as small as 350m2 and land price being significantly high, any adjustment in the land area may have a significant impact on your desire or ability to purchase.
8. Boundary Pegs
Make sure that under the sale and purchase agreement, the developer is responsible for pegging out the site. It is often overlooked how important this is as incorrect pegging can result in drastic consequences.
9. Master Scheme Plan
For many new subdivisions, there is generally a master scheme plan, which provides an overall concept plan for the development. However, the master scheme plan can be amended and do not provide owners of sections to object to any future changes to the development plans and proposals.
10. Builder
It is sometimes a requirement to appoint a builder that is a Registered Master Builder or Certified Master Builder, which you should be aware of when selecting your builder.