How does buying 'off the plan' work, and what are the risks in Australia?
How an off-the-plan purchase works in Australia, plus the risks — sunset clauses, valuation shortfalls, duty and grant rules — before you sign.
How does buying off the plan work, and what are the risks?
“Off the plan” means signing a contract to buy a home before it’s finished being built — sometimes before construction has even started. You exchange contracts now, based on architectural plans, specifications and a display suite or renders, and you settle later, once construction is complete and the property (or the strata plan for an apartment) is registered. The core risks are not unique to any one state, but the protection you get against them is: how long a project can run late before either side can walk away, whether the bank’s valuation at settlement matches what you agreed to pay years earlier, and whether the finished home matches what you were shown. This article covers the mechanics, the risks, and how the incentives — stamp duty concessions and First Home Owner Grants — differ by state for an off-the-plan purchase specifically.
What actually happens between exchange and settlement?
An off-the-plan purchase follows the same broad shape as any property purchase — offer, contract, exchange, settlement — but the gap between exchange and settlement can run to years rather than weeks, because settlement is tied to construction finishing, not a fixed calendar date. A typical sequence looks like this: you sign a contract of sale based on plans and a schedule of finishes, then pay a deposit at exchange that’s held in trust until settlement. Construction proceeds over months or years. Once the building is complete, the developer registers the plan of subdivision (for a strata or community-titled property) and gives notice that the property is ready; settlement then follows within a period set by the contract itself, not by a fixed law.
Because the deposit is committed years before you get the keys, and because the eventual settlement date is an estimate rather than a promise, buying off the plan carries a timing risk that an established-home purchase generally doesn’t. The next three sections cover the specific mechanisms behind that risk.
Does the standard cooling-off period apply to an off-the-plan contract?
Cooling-off rules are set by each state, and only three are verified here as at July 2026 — NSW, VIC and QLD:
- NSW — 5 business days from exchange for a standard residential contract, extended to 10 business days for an off-the-plan contract. It doesn’t apply at auction or after a same-day exchange following a passed-in auction, and it can be waived under section 66W of the Conveyancing Act.
- VIC — 3 clear business days from signing for a private sale of residential property or small rural land under 20 hectares. It doesn’t apply at, or within 3 days of, a public auction. Withdrawing during the cooling-off period costs the greater of $100 or 0.2% of the price.
- QLD — 5 business days from receiving the signed contract for a private-treaty purchase. It doesn’t apply at auction, or to a registered bidder buying privately within 2 days of a failed auction. A penalty of up to 0.25% applies, and the period can be waived.
South Australia, Western Australia, Tasmania, the ACT and the Northern Territory each set their own cooling-off arrangements, which aren’t verified here — check with the property’s own state consumer affairs or fair trading body before you sign anything.
What is a sunset clause, and why does it matter?
An off-the-plan contract typically sets an outside date — a sunset date — by which the development must be completed and registered. If the project runs later than that date, the contract may allow one or both parties to end it. In a rising market, that clause can work against a buyer: if a developer rescinds under a sunset clause once values have climbed past the original contract price, the buyer loses the home they contracted for and has to re-enter the market at a higher price.
Three states specifically limit a developer’s ability to do this, as at July 2026. In NSW, a vendor can rescind under a sunset clause only with each purchaser’s written consent or an order of the Supreme Court, after giving at least 28 days’ written notice explaining the reason for the delay (Conveyancing Act 1919, s66ZS). Victoria applies the same consent-or-court-order structure, with the same 28-day notice requirement (Sale of Land Act 1962, ss10B and 10E). Queensland requires the same written consent or Supreme Court order — but only for a sunset clause in a vacant-land or house-and-land contract; the protection specifically doesn’t extend to a lot in a community titled scheme, so it doesn’t cover a typical off-the-plan apartment (Land Sales Act 1984, ss19D and 19F). No equivalent purchaser-consent or court-order requirement was found for South Australia, Western Australia, Tasmania, the ACT or the Northern Territory — and, as above, it doesn’t apply to a Queensland apartment either. In those cases, the clause operates exactly as drafted in your contract.
Sunset clause wording varies by contract as well as by state, so this is one of the clauses a conveyancer or solicitor should be asked to explain specifically, before you sign — not assumed to work the same way as in a friend’s contract or a different development.
What if the bank’s valuation at settlement is lower than the price you agreed at exchange?
A lender assesses a property’s value at, or close to, settlement — which for an off-the-plan purchase can be one to several years after you locked in the contract price. If the market has moved sideways or down over that period, the bank’s valuation can come in below what you agreed to pay, which changes the loan-to-value ratio (LVR) your lender is working with.
LVR = loan amount ÷ property value
Lenders mortgage insurance (LMI) usually becomes payable once the amount you’re borrowing is above 80% of the property’s value, and it protects the lender, not you as the borrower. If a shortfall between the contract price and the completion valuation pushes your LVR above 80%, or above what you’d budgeted for, you may need to find extra funds, borrow more (with LMI attached), or renegotiate finance — a possibility worth planning for rather than assuming away.
What financial incentives are specific to buying off the plan?
Stamp duty concessions and First Home Owner Grants are set state by state, and several explicitly name off-the-plan purchases as eligible — sometimes with rules that don’t apply to established or already-completed new homes. The figures below are current as at July 2026; five of the eight jurisdictions changed their settings materially in the twelve months before this was written, so check the linked revenue office before relying on any of them.
| State | FHOG (new homes) | Duty/concession note |
|---|---|---|
| NSW | $10,000; explicitly includes off-the-plan | Same threshold as any new home |
| VIC | $10,000; cap uses the contract price | Off-the-plan may reduce dutiable value |
| QLD | $30,000 (contracts from 20 Nov 2023) | No value cap since 1 May 2025 |
| SA | Up to $15,000; no value cap (contracts from 6 Jun 2024) | No value cap; off-the-plan apartments named eligible |
| WA | Up to $10,000 | FHOR and off-plan concession both changing, delayed |
| TAS | $20,000 (FY2026–27) | Off-the-plan duty concession closed to new contracts (30 Jun 2026 cut-off) |
| ACT | None — Home Buyer Concession Scheme instead | $0 duty, no cap, from 1 July 2026 |
| NT | $50,000; also covers established homes | No FHB duty concession; house-and-land exemption may apply |
NSW — The $10,000 First Home Owner Grant is explicitly available for a home “newly built, purchased off the plan or substantially renovated,” capped at a $600,000 purchase price (or $750,000 combined for vacant land plus a building contract). The separate First Home Buyers Assistance Scheme duty concession — full exemption to $800,000, a concessional rate to just under $1,000,000 — applies the same threshold whether the home is new, off-the-plan or established; there’s no separate off-the-plan carve-out in the duty scheme itself.
VIC — The $10,000 grant’s $750,000 property value cap is measured differently for an off-the-plan purchase: it “refers to the contract price,” not the completed home’s eventual market value. Victoria’s first home buyer duty exemption or concession (nil to $600,000, a sliding scale to $750,000) applies to new, established or vacant-land purchases alike, but off-the-plan purchases specifically may also reduce the dutiable value used to calculate duty through a separate off-the-plan duty concession. The dutiable value becomes the contract price minus the construction or refurbishment cost incurred on or after the contract date — the vendor works out that subtraction using one of two methods (a fixed-percentage method or an alternative method) and passes the resulting figure to your conveyancer. A temporary version of this concession, for contracts signed between 21 October 2024 and 21 April 2027, drops the property-value threshold entirely and is open to any purchaser, including investors; the pre-existing version, for contracts from 1 July 2023, keeps thresholds of $750,000 for first home buyers or $550,000 for other owner-occupiers, measured after the construction-cost subtraction.
QLD — Since 1 May 2025, Queensland’s first home (new home) duty concession has had no value cap at all, reducing duty to nil for a home that’s never been occupied or sold as a residence — which includes an off-the-plan purchase. From 1 August 2026, Queensland will require buyers of a home, first home or vacant land to be an Australian citizen, permanent resident or specified foreign retiree; that requirement is not yet in force as at July 2026. The $30,000 First Home Owner Grant (for contracts from 20 November 2023) explicitly includes off-the-plan and comprehensive home building contracts.
SA — South Australia’s stamp duty relief names “a new home, an off-the-plan apartment, or vacant land you will build your new home on” as its three eligible categories, with no property value cap for contracts from 6 June 2024 — an off-the-plan apartment buyer pays no duty regardless of price, while an established-home buyer gets no relief at all under this scheme. The separate First Home Owner Grant is up to $15,000 for new homes, off-the-plan apartments and comprehensive building contracts, with no property value cap for contracts entered into on or after 6 June 2024, and a residence requirement of at least 6 continuous months starting within 12 months of completing the eligible transaction.
WA — Western Australia’s first home owner rate of duty is currently assessed at $500,000–$700,000 (Perth metro/Peel) or $500,000–$750,000 (elsewhere) for no-duty and concessional bands. A 2026-27 Housing Taxation Package, announced 7 May 2026, would lift these thresholds and also change a separate off-the-plan duty concession — but RevenueWA states neither change can take effect until system updates are finished, estimated for late July 2026. Buyers contracting in the gap are assessed at the old figures now and reassessed, with a refund if applicable, once the new settings commence. The First Home Owner Grant (up to $10,000) doesn’t single out off-the-plan purchases by name, but a not-yet-built or newly built home bought off the plan meets the grant’s “new home” test.
TAS — Tasmania’s First Home Owner Grant is $20,000 for transactions commencing between 1 July 2026 and 30 June 2027 (it was $30,000 the year before), and off-the-plan purchases are explicitly eligible. Tasmania’s 100% established-home duty exemption — which only ever applied to established homes, not an off-the-plan purchase — lapsed for settlements after 30 June 2026. Tasmania also ran a separate off-the-plan apartment or unit duty concession: a 50% reduction in transfer duty for a strata-titled or conjoined dwelling with a dutiable value of $750,000 or less, provided no First Home Owner Grant was paid on the same purchase. That concession required the contract itself to be signed between 1 July 2024 and 30 June 2026 — a window now closed to any new off-the-plan contract, though a buyer who exchanged within it can still use the concession, since the actual transfer is allowed up to 30 June 2031. As at July 2026, there’s no duty concession currently available in Tasmania for a newly signed off-the-plan contract.
ACT — From 1 July 2026, the Home Buyer Concession Scheme charges $0 conveyance duty on any residential property — new, established or vacant land, including an off-the-plan unit — with no price cap and no income test, subject to a five-year look-back on prior property ownership and a 12-month residence requirement. Separately, the ACT’s 2026-27 Budget also removed the price cap (from 1 July 2026) from the general off-the-plan unit duty exemption, which isn’t limited to first home buyers. For contracts exchanged from 1 July 2026, that exemption charges no duty at all on an off-the-plan unit — a new apartment or new townhouse — bought by an owner-occupier, with no property value limit; the buyer must own and live in the home continuously for at least a year, starting within 12 months of the contract’s completion (settlement) date. It doesn’t extend to a house-and-land purchase, which isn’t a “unit” for this exemption.
NT — The Northern Territory has no first-home-buyer-specific duty concession. Its House and Land Package Exemption may apply to a house-and-land purchase from a builder (contracts 1 July 2022–30 June 2027), with no value cap, though this isn’t restricted to first home buyers and doesn’t cover a strata-titled off-the-plan apartment. The Territory’s $50,000 grant (for transactions commencing 1 October 2025–30 September 2027) is unusual in also covering established homes, and would apply to an off-the-plan new-home purchase on the same terms.
What other risks should you weigh before signing?
None of these points is a reason to rule off-the-plan in or out — they’re factors that carry different weight depending on your own timeline, finances and appetite for uncertainty:
- Construction and settlement timing. The completion date in your contract is an estimate. A delay pushes out settlement, and a long enough delay can trigger the sunset clause discussed above.
- The deposit is committed for longer. Compared with an established-home purchase, your deposit sits with the developer or in trust for a much longer period before you get the keys, during which your own circumstances or the market can change.
- Variations from the display suite. Contracts typically allow the developer some latitude to vary fittings, finishes or minor specifications during construction — worth checking exactly what the variation clause in your contract permits.
- Valuation shortfall at settlement, discussed above, which can affect how much you’re able to borrow and whether LMI applies.
- Financing needs revisiting closer to completion. A pre-approval obtained at exchange is unlikely to still be current by the time an off-the-plan project settles, and pre-approval itself was never a guarantee that a loan will proceed — you may need updated approval, and a fresh valuation, nearer to settlement.
- Builder or developer solvency over a multi-year build is outside a buyer’s control.
- No operating history. An owners corporation or body corporate for a new building has no track record of levies, maintenance or dispute handling, unlike an established strata scheme.
How do you decide whether an off-the-plan purchase is right for you?
That isn’t a question this article can answer for you. Whether the potential benefits — a stamp duty concession or grant that applies specifically to off-the-plan or new homes in your state, or simply liking a particular development — outweigh the timing, valuation and construction risks above depends on your own finances, your tolerance for a settlement date that can move, and the specific contract you’re being asked to sign. A solicitor or conveyancer who regularly reviews off-the-plan contracts is the right person to walk through the sunset clause, the variation clause and the deposit terms in your specific contract before you commit to it.
For the deposit side of an off-the-plan purchase, our guide to how much deposit a first home buyer typically needs is a useful starting point, and our step-by-step guide to the stages of buying a house in Australia sets out how an off-the-plan purchase fits into the broader process. If grants and duty concessions are the main draw, our state-by-state guides to First Home Owner Grant rules and to first home buyer stamp duty concessions cover the detail beyond what’s summarised above. And because financing an off-the-plan purchase usually means revisiting your approval closer to settlement, it’s worth reading what home loan pre-approval actually means and why pre-approval doesn’t guarantee a loan before you rely on either.
