In short: Buying off the plan means signing a contract for an apartment, townhouse or house before it is built, usually with a 10% deposit and settlement 12 to 30 months later. In Victoria duty is calculated on the land and construction completed at contract date, and the $10,000 First Home Owner Grant applies. The main risks are a low valuation at completion, delays and sunset clauses.
Off-the-plan buying appeals for good reasons: a brand-new home, a long runway to save, and in Victoria, some of the most generous duty treatment available. It also has a failure mode that catches buyers every cycle: you agree a price today and your lender values the property years later at whatever the market says then. This guide covers how the purchase works, the 2026 duty rules, how finance actually happens, and the contract clauses that protect you.
How an off-the-plan purchase works
- Reservation. You pay a small holding deposit (often $1,000 to $5,000) to hold a lot while the contract is prepared.
- Contract. You sign a contract of sale and pay the full deposit, usually 10%, which is held in the vendor's solicitor's trust account (or via a deposit bond or bank guarantee if the developer allows). A cooling-off period of three clear business days applies to private sales, including off the plan.
- Construction. The developer builds. This is 6 to 12 months for a townhouse in Wollert or Donnybrook, and 18 to 30 months for an apartment tower.
- Notice of title registration. When the plan of subdivision is registered and titles issue, the vendor gives notice and settlement is typically due 14 days later.
- Finance. You apply for formal loan approval about 2 to 3 months before expected completion. The lender values the finished property.
- Pre-settlement inspection. You inspect for defects and the vendor rectifies or agrees to.
- Settlement. The balance is paid, the title transfers, and you get the keys.
Read contract of sale in Victoria and the settlement process for the legal detail.
Stamp duty on off-the-plan purchases in 2026
The off-the-plan concession
Victoria's off-the-plan duty concession calculates duty on the dutiable value at the contract date: the land plus any construction already completed, not the finished price. Under the temporary expanded concession that applies to apartments and townhouses for all buyers, including investors, the saving can be large. That temporary expansion ends on 20 October 2026. Contracts signed after that date fall back to the older rules, under which the concession is limited to owner-occupiers who meet the principal-place-of-residence or first-home-buyer thresholds.
Worked example: $650,000 Craigieburn townhouse
A townhouse in a new Craigieburn development is contracted at $650,000 before a shovel has hit the ground. The developer's construction cost still to be incurred is $350,000.
| Established $650,000 home | Off the plan, $350,000 construction to come | |
|---|---|---|
| Dutiable value | $650,000 | $300,000 |
| General duty | $34,070 | approx. $13,070 |
| Duty for an eligible first home buyer | approx. $11,357 | $0 (under $600,000) |
| First Home Owner Grant | Not available | $10,000 |
For a first home buyer the off-the-plan route saves around $11,000 in duty and delivers a $10,000 grant, a swing of more than $21,000 compared with an established townhouse at the same price. For an investor the saving is about $21,000 in duty alone while the temporary concession lasts. Check figures on the stamp duty calculator and read stamp duty exemptions and concessions in Victoria for the fine print, including that duty is payable at settlement even though it is assessed on the contract date.
The State Revenue Office publishes the current rules at sro.vic.gov.au.
The First Home Owner Grant
Off-the-plan homes are new homes, so an eligible first home buyer receives the $10,000 grant provided the total contract price is $750,000 or less and they move in within 12 months of settlement for at least 12 continuous months. See First Home Owner Grant Victoria.
Finance: the part most buyers get wrong
Pre-approval will expire
A pre-approval lasts about 90 days. If completion is 18 months away, your pre-approval will lapse long before you need it. The pre-approval you get before signing proves you can borrow today; it does not commit any lender to lend at completion. Your income, the lender's policy and interest rates may all change. Assume you will re-apply from scratch 2 to 3 months before settlement. See home loan pre-approval.
The valuation happens at completion
Lenders lend against the valuation of the finished property, not the contract price. If you contracted at $650,000 and the valuer says $600,000 at completion, the lender lends against $600,000 and you fund the difference.
| Contract price | Valuation at completion | 90% loan on valuation | Deposit paid | Extra cash you must find |
|---|---|---|---|---|
| $650,000 | $650,000 | $585,000 | $65,000 | $0 |
| $650,000 | $620,000 | $558,000 | $65,000 | $27,000 |
| $650,000 | $600,000 | $540,000 | $65,000 | $45,000 |
Plus LMI on the higher effective LVR. This is the single largest risk in off-the-plan buying and the reason to keep saving through the build. Every extra dollar you save is a buffer against a low valuation. Use the deposit savings calculator to set a target.
Deposit bonds and bank guarantees
Rather than tying up $65,000 in a trust account for two years, some buyers use a deposit bond (an insurance product) or a bank guarantee. The developer must agree. A bond costs a fee based on the amount and term; it can be worthwhile if the cash would otherwise earn interest or reduce another loan. See deposit bonds.
Interest rate risk
Rates at settlement will be whatever the market sets then. You cannot fix a rate 18 months in advance. Build a rate buffer into your budget; at 6.00% a $585,000 loan is about $3,507 a month, at 7.00% about $3,892.
Contract clauses to check
Have a conveyancer review the contract before the cooling-off period ends. Key items:
- Sunset clause. Sets the date by which the plan must be registered. Since 2019, Victorian vendors cannot rescind under a sunset clause without the buyer's written consent or a Supreme Court order, which closed the loophole where developers cancelled and resold at higher prices. Buyers can still rescind if the sunset date passes.
- Variation clause. Developers may reserve the right to alter plans, finishes, layout or size within limits (commonly 5%). Check the limit and what happens if it is exceeded.
- Deposit release. Whether the developer can use your deposit for construction (riskier) or it stays in trust.
- Settlement period after notice. Typically 14 days; ask for 21 if your lender is slow.
- Defects period. The window after settlement for the builder to fix defects, and who arranges it.
- Owners corporation. Budget, rules, insurance and any sinking fund. Apartment fees in a tower with a pool and lifts can run $4,000 to $8,000 a year; a Wollert townhouse estate may be $500 to $1,500. See owners corporation and strata in Victoria.
- GST and price. Confirm the price is GST-inclusive and whether the margin scheme applies.
- Builder and developer. Search past projects, insolvency history and domestic building insurance.
Off the plan versus house and land
Both deliver a new home and the grant. The difference is who carries construction. In an off-the-plan purchase the developer builds and you settle once; in a house-and-land package you buy the land, settle on it, then draw a construction loan in progress payments. Off the plan means less administration and no construction loan interest during the build, but exposes you to the developer's timeline and the completion valuation. House and land gives you control and staged finance. The comparison is in house and land versus established, and our construction loans page covers the staged model.
Checklist before you sign
- Independent conveyancer has reviewed the contract and disclosure
- Sunset date, variation limits and settlement period understood
- Deposit arrangement chosen: cash in trust, bond or guarantee
- Current pre-approval in hand, with a plan to re-apply before completion
- Budget includes duty at settlement, conveyancing, owners corporation fees and a valuation buffer
- Grant and duty concession eligibility confirmed
- Developer and builder background checked
- Savings plan in place for the build period
Common mistakes
- Treating the pre-approval as finance. It will expire. The real approval happens near completion.
- Spending the buffer. Buyers who stop saving after paying the 10% deposit have nothing to cover a low valuation.
- Paying a premium for "new". Compare the contract price with recent sales of similar completed homes nearby, not the developer's brochure.
- Missing the 20 October 2026 date. For investors and buyers over the first-home-buyer thresholds, the temporary concession matters. A contract signed on 25 October is treated differently from one signed on 15 October.
- Ignoring owners corporation costs in a serviceability calculation. Lenders count them; so should you.
- Buying in a tower with many identical apartments if you plan to sell or refinance soon. Valuers use comparable sales, and 40 identical listings at once suppress the figure.
- Not inspecting before settlement. Defects are far easier to have fixed before you hand over the money.
Frequently asked questions
What happens if my off-the-plan valuation comes in low?
The lender will lend a percentage of the valuation, not the contract price, so you must cover the gap with cash, pay more LMI, or both. On a $650,000 contract valued at $600,000, a 90% loan drops from $585,000 to $540,000 and you need an extra $45,000. Options include requesting a second valuation through another lender, using a guarantor, or negotiating with the developer, who may prefer a discount to a failed settlement.
Is a sunset clause bad for buyers?
Not in Victoria since 2019. Vendors can no longer rescind under a sunset clause without the buyer's written consent or a Supreme Court order, so developers cannot cancel and resell at a higher price. The clause still protects buyers, who can walk away with their deposit if the plan is not registered by the sunset date. Check that the date is realistic; a very distant sunset date locks your deposit up longer.
Do you pay stamp duty on off-the-plan purchases in Victoria?
Yes, but often much less. Duty is assessed on the dutiable value at the contract date, meaning the land plus construction completed at that point, rather than the finished price. On a $650,000 townhouse with $350,000 of construction still to come, the dutiable value is about $300,000, so a first home buyer pays nothing and other buyers pay around $13,070 instead of $34,070. The temporary expanded concession for all buyers ends 20 October 2026.
Can I get the First Home Owner Grant on an off-the-plan apartment?
Yes. An off-the-plan apartment or townhouse is a new home that has never been occupied, so it qualifies for the $10,000 Victorian grant if the contract price is $750,000 or less and you are an eligible first home buyer who moves in within 12 months of settlement and lives there for 12 continuous months. The grant is usually applied for through your lender and paid at settlement.
When should I apply for finance on an off-the-plan purchase?
Get a pre-approval before you sign so you know you can borrow, then apply for formal approval 2 to 3 months before expected completion. Formal approval requires a valuation of the finished property, which cannot happen until it is close to complete. Keep your finances stable throughout the build: no new debts, no job changes without discussion, and keep saving to build a valuation buffer.
Can I sell an off-the-plan property before settlement?
Sometimes, if the contract allows nomination or assignment and the developer consents. In Victoria, nominating a new purchaser can trigger additional duty if the property has increased in value or if the nomination is for consideration, so seek advice before relying on it. Selling before settlement usually means selling into a market with many similar unsettled lots, which limits the price you can achieve.
Talk to GNT Finance
Off-the-plan finance is a two-stage job: proving you can borrow now and getting you approved at completion, with a plan for the valuation in between. We manage both stages and know which lenders are comfortable with new developments in Melbourne's north. Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.