Buying An Apartment Off A Plan

So you want to buy an apartment off a plan? Be careful! Buying off a plan can be rewarding, resulting in a brand new and beautifully finished product. You will be told that the prices will be higher for sales once the apartment building is built, so you can expect a discount for being part of the pre-sale. However, there are risks involved, and it can be a complex process. Because you cannot see what you are buying before you buy it, the end product may not be quite what you expect!

1 .What will you get

You really need to do your due diligence on these properties. We are aware of a number of circumstances where clients have been upset or frustrated at the final product because they didn’t completely understand what it would be like.

Check the plans and specifications carefully, and if you struggle to understand them get them checked over by a professional. You will need to consider not just the apartment you are buying, but also its situation in the overall building, including parking, access, and building services. Remember, your purchase is not just is not just an apartment, but an interest in the entire building as a member of the body corporate. It is important to understand how your future home works as a three dimensional space as well, including making sure things like windows, balconies and fixtures are at the right elevation for you to use.

Artists’ impressions are all well and good as a general guide, but they tend to show the property in a favourable light, and your main focus should be on the plans and specifications.

2. The contract

Contracts tend to be in standard forms, and therefore tend not to be negotiable. This is especially the case with apartments, where your apartment is a part of a much larger structure with precisely designed building services.

These documents tend to be longer and more complicated than an ordinary purchase contract, as it must cover the subdivision of the stratum, the construction of the building, and finally the actual purchase process. They also tend to be weighted heavily in favour of the developer to give them maximum flexibility at your expense. For this reason you need to have them checked carefully by a lawyer who can then fully advise you as to the implications of what you are signing.

One very common feature of such a contract is the developer’s ability to change the plans and specifications, often at their sole discretion. You can expect this to happen if materials become unavailable, councils impose unexpected requirements, or designs prove to be infeasible. However, generally speaking the builder should stick as close as possible to the original plans and specifications, and your contract should reflect that.

3. Conditions

Because of the complexity of these transactions, you need to do your due diligence. It is common for these contracts to be conditional on due diligence or at the very least solicitor’s approval, and you will need to make these a sufficient duration to allow your solicitor to give you comprehensive and detailed advice. Salespeople will occasionally try to reduce the scope and duration of these conditions – don’t let them! Or at the very least ask your solicitor before signing the contract.

These agreements should always be conditional on finance. You need to be aware of how your finance arrangements interact with what can often have a distant settlement date. If, for example, settlement is due to take place in about a year’s time, your finance approval simply may not extend that long. Your bank may be able to give you an indication that in a year’s time finance will still be approved, but may not be able to guarantee it. Many things change in a year. Accordingly, we advise our clients to tread carefully, perhaps obtaining backup approvals, or perhaps ensuring they have a larger deposit than they would otherwise plan for.

Finally, Code Compliance Certificate should be a pre-condition of settlement. The builder may be committing an offence by letting you into the property without Code Compliance, but more than that – the lack of a Code Compliance Certificate can completely ruin your finance!

Sometimes developers promise a Code Compliance Certificate for your apartment but not for the building as a whole, which may be finished off later – this may mean you lack essential building services while still being forced to settle on your apartment.

4. Paying for it

Your payments should take the form of a standard 10% deposit upfront, followed by the balance on the settlement date. Sometimes progress payments are requested, but that isn’t usually feasible for apartment purchases. In any event your contract should provide that any money you pay upfront is protected in a stakeholder’s account until settlement is imminent.

News flash for first home buyers: Recent changes to the Housing New Zealand HomeStart Grant mean that you can now obtain this grant prior to settlement, in order to apply it towards a deposit or progress payment when buying off the plans. However, the rules surrounding this are very strict and you will need to discuss this with your solicitor before making these arrangements.

From 1 June 2015, legislative changes will allow a KiwiSaver First Home Withdrawal to be used to make deposit payments in certain circumstances.


In summary, you need to do your due diligence on the contract and plans. Get comprehensive legal advice early to ensure you are not buying on poor terms. Paying for the property can be complicated, but your solicitor can assist in exploring these options and ensuring your money is protected. Buying off the plan from a big reputable developer should help to minimise most of the risks.

Guest blog from Jessie Foley
DDI: (+64 9) 915 2401

Jessie joined Fortune Manning in February 2008 as a Mobile Conveyancer serving clients in Central, West and North Auckland. She also works closely with real estate agents and mortgage brokers to ensure that a great level of service is provided to clients referred by agents and brokers.


Dustin Lindale June 9, 2015 Blog, Tips for First Home Buyers