Property Buying · May 2026
Off the Plan Properties in Sydney — Risks, Benefits & What to Check Before You Sign
Off the plan apartments continue to attract buyers in Sydney, particularly in growth corridors around Parramatta, Macquarie Park, Rhodes, and the inner west. The appeal is clear — secure today's price and settle in 2–3 years when the property might be worth more. But the risks are equally real, and several Sydney buyers have lost deposits or found themselves financially exposed at settlement. Here's what you need to understand before signing.
How Off the Plan Finance Actually Works
When you purchase off the plan, you exchange contracts and pay a deposit (typically 10%) but settlement — and the full loan drawdown — doesn't happen until the building reaches practical completion, often 18 months to 3 years away. Your lender provides conditional pre-approval, not unconditional approval, at exchange. This distinction is critical.
You will need to renew or re-apply for formal loan approval as settlement approaches. If your financial circumstances have changed — job change, new debt, reduced income — or if the property valuates below the purchase price, the lender may not approve the loan at the original amount. This is the primary financial risk of off-the-plan purchasing.
The Settlement Valuation Risk
When your lender orders a valuation at settlement, they value the completed property at current market value — not the price you agreed to pay 2 years ago. In a flat or declining market, this valuation can come in below the contract price.
Example: You agreed to pay $900,000. At settlement, the independent valuation comes in at $820,000. Your lender will only lend against $820,000. If you had a 90% LVR loan, you planned to borrow $810,000 and contribute $90,000. With the new valuation, 90% is only $738,000 — meaning you now need to contribute $162,000, or reduce your LVR. The shortfall must come from your own funds. This situation has caught many buyers off guard, particularly in periods of oversupply or market correction.
Mitigation: keep a cash buffer above your minimum deposit
A conservative approach is to have enough equity/cash to cover the purchase even if the property values 10–15% below the contract price. Don't rely on hitting exactly the right valuation at settlement.
Sunset Clauses — The Developer's Escape Hatch (and NSW Protections)
A sunset clause sets a deadline by which the developer must complete the building and allow settlement. If that deadline passes, either party may rescind the contract. In rising markets, developers have historically used sunset clauses opportunistically — triggering rescission and then re-selling the same apartment at a higher price to a new buyer.
NSW law now provides significant protections. Under the Conveyancing Amendment (Sunset Clauses) Act, developers wishing to rescind under a sunset clause must either obtain the buyer's written consent or obtain a court order. Courts examine whether the developer intentionally delayed completion to trigger the clause. These protections have materially reduced developer-initiated rescissions in NSW compared to Queensland and Victoria, where weaker protections remain.
What to check in your contract: The sunset clause period should be at least 18 months and ideally 24 months from the expected completion date. A clause set at 12 months is a yellow flag — ask your solicitor to negotiate for more time.
Stamp Duty on Off the Plan Purchases
First home buyers: The NSW stamp duty exemption (zero duty up to $800,000; concession $800k–$1M) applies to off-the-plan first home purchases. The purchase price for stamp duty purposes is the contract price — not the eventual completed value. If you're a first home buyer purchasing a new apartment for $780,000, you pay no stamp duty regardless of what it's worth at settlement.
Other buyers: NSW provides a stamp duty deferral for off-the-plan contracts — you don't pay until settlement (or 12 months after exchange, whichever is earlier) rather than at exchange. This improves cash flow during the build period but does not reduce the total stamp duty amount.
FHOG Eligibility for Off the Plan
The $10,000 First Home Owner Grant is available for off-the-plan purchases where the contract price is under $600,000 and the property is new (as it will be once completed). The grant is paid at settlement. Note the threshold: a $620,000 off-the-plan apartment does not qualify for the FHOG even though it qualifies for the stamp duty exemption (which runs to $800,000).
7 Things to Check Before Signing an Off the Plan Contract
1. Developer track record — How many projects have they delivered on time? Have they had voluntary administration or project delays in the past 5 years?
2. Sunset clause length — 18–24 months beyond expected completion is reasonable. 12 months is tight. No sunset clause is unusual and should raise questions.
3. Sunset clause developer rights — Confirm your solicitor checks for any unilateral rescission rights and verifies they comply with NSW law.
4. Finance clause — Ensure the contract has a finance clause allowing you to exit if you can't obtain settlement finance. Some off-the-plan contracts don't include this by default.
5. Finishes schedule — What can the developer substitute without your consent? Cheaper substitutions for appliances, floor coverings, and fittings can significantly reduce the quality and resale value of the finished apartment.
6. Strata levies forecast — Ask for the disclosure statement showing estimated strata levies. Unexpectedly high levies reduce the property's rental yield and resale appeal.
7. Your finance buffer — Model the scenario where the property values 10% below contract. Do you have the cash to bridge the gap? If not, consider whether the purchase is the right risk profile for your position.
Bridge Finance regularly assists clients through off-the-plan purchases — from pre-exchange financial modelling through to settlement finance. Book a free consultation to understand how this type of purchase fits your overall strategy.
About the Author
William Zhu
Director, Bridge Finance. 8 years of mortgage broking + 5 years in construction. $600M+ settled. Access to 70+ lenders. MFAA member.
Book Free Consultation →Ready to take the next step?
Book a free 30-minute consultation with William. No fees, no obligation — just expert advice tailored to your situation.
© 2026 Bridge.Finance Pty Ltd ATF Zhu Family Trust. Credit Representative 567817 of Australian Credit Licence 384704. MFAA Member. AFCA Member.
Get in touch
Ready to take the next step?
Whether you're just starting your property search or ready to apply, we'd love to help. Reach out for a free, no-obligation chat and find out what's possible for your situation.
Follow along on TikTok (@williamzhufinance) for property tips, market insights, and honest mortgage advice.
Address
217 Burwood Road, Burwood NSW 2134, Australia