Common Risks When Buying Off-the-Plan in Victoria

Buying off-the-plan — purchasing a property before it's built — can be appealing, especially for first-home buyers and investors. You may secure a lower price today and pay later, sometimes years down the track. But with opportunity comes risk.

At DY Conveyancing Melbourne, we’ve helped many clients navigate the complexities of off-the-plan contracts. Here's what you need to know.

1. Market Value May Drop Before Completion

One of the biggest risks is that property values may fall during the construction period. If the finished property is worth less than your contract price, you may:

• Struggle to secure finance

• Be required to pay the shortfall out of pocket

• Face pressure to settle on a property that's now overvalued

2. Changes to the Final Product

Off-the-plan contracts usually allow developers some flexibility. This means:

• Floor plans can be modified

• Materials or finishes may differ from marketing brochures

• Views, orientation, or even overall size can vary

Always check the variation clauses in your contract — what seems like a small design change could affect your future use or resale value.

3. Delays in Completion

Construction timelines are notoriously unpredictable. Your property may be delayed due to:

• Weather

• Permit issues

• Labour shortages

• Financing problems on the developer’s side

These delays can affect your plans to move in, rent the property, or meet finance approval timeframes.

4. Sunset Clauses and Contract Termination

Sunset clauses give either the developer or buyer the right to terminate the contract if the project isn’t completed by a certain date. In some past cases, developers have used these clauses to cancel contracts, then resell properties at a higher price.

New Victorian laws now restrict this practice, but you still need to understand:

• Who can terminate under the sunset clause?

• How long is the sunset period?

• What rights do you have if the contract is cancelled?

5. Developer Insolvency

If the builder or developer becomes insolvent before completion, your contract may become void — or the property may be finished by another party, potentially with quality or legal concerns.

Make sure the developer is reputable and financially sound before committing.

6. Finance Risk at Settlement

Banks generally won’t offer formal loan approval until the property is complete. If:

• Your financial situation changes

• Lending criteria tightens

• Property values fall

…you may be unable to settle, risking loss of deposit or legal action.

Tips for Buyers

• Get your contract reviewed by an experienced conveyancer before signing

• Understand your rights to terminate or negotiate if things go wrong

• Stay updated on the construction timeline and any developer updates

• Be prepared for potential delays and financial flexibility at settlement

Need Help Before You Sign?

Off-the-plan contracts are complex and heavily favour developers. At DY Conveyancing Melbourne, we offer fixed-price contract reviews to help you understand exactly what you're signing — and avoid surprises later.

Reach out to us before you commit. Your future self will thank you.