Off-the-Plan Property Guide for Foreign Buyers in Australia (2025)

Last updated: January 2025 | 14 min read

If you're a foreign investor looking to buy Australian property in 2025, off-the-plan purchases aren't just an option—they're likely your only option. With the temporary ban on established dwellings running from April 2025 to March 2027, new developments have become the primary pathway for foreign capital entering Australia's residential property market.

But buying off-the-plan carries unique risks that don't exist with completed properties. Sunset clauses, valuation gaps, construction delays, developer insolvency, and defect issues can turn a promising investment into a costly mistake.

This guide explains everything foreign buyers need to know about off-the-plan purchases: how they work, what they cost, what can go wrong, and how to protect yourself.

Why Off-the-Plan Matters Now More Than Ever

The Established Dwelling Ban

From April 1, 2025 to March 31, 2027, the Australian government has implemented a comprehensive ban on foreign persons purchasing established dwellings. This includes:

• ❌ Foreign nationals (non-residents)
• ❌ Temporary residents (482, 485, 500, 820 visa holders)
• ❌ Foreign-owned companies and trusts

Very limited exceptions exist only for large-scale redevelopments creating 20+ additional dwellings, qualifying build-to-rent projects, and properties under specific government schemes.

What this means: If you're a foreign buyer wanting Australian property exposure before 2027, your options are:

• ✅ Off-the-plan apartments and townhouses
• ✅ Newly constructed dwellings (never occupied)
• ✅ House-and-land packages
• ✅ Vacant land (with development obligations)

Off-the-plan purchases have become the default choice for most foreign investors.

The Appeal for Foreign Buyers

Beyond regulatory necessity, off-the-plan offers genuine advantages:

Lower entry costs: Typically requires only 10% deposit at contract exchange (though foreign buyers often need 20-30% for finance approval later).

Time to arrange finance and capital: The 2-4 year construction period provides time to transfer funds, arrange Australian mortgages, and manage capital controls.

Stamp duty timing: In most states, you pay stamp duty on the contract price at the time of signing—not the potentially higher value at completion.

Depreciation benefits: Brand new properties maximise tax deductions through building depreciation (2.5% annually for 40 years) and fixtures depreciation.

Modern design and compliance: New buildings meet current energy efficiency, accessibility, and safety standards.

How Off-the-Plan Purchases Work

The Basic Structure

When you buy off-the-plan, you're purchasing a property that doesn't yet exist—or is under construction. The transaction follows this general timeline:

Stage 1: Contract Exchange

• Sign the contract of sale
• Pay initial deposit (typically 10%)
• Deposit held in trust until settlement
• FIRB approval obtained (or developer exemption certificate used)

Stage 2: Construction Period (12-36+ months)

• Developer constructs the building
• You have limited ability to visit or inspect
• Your deposit earns interest in trust account
• Market conditions may change significantly

Stage 3: Completion and Settlement

• Developer notifies you of completion
• You arrange final inspection
• Balance of purchase price due (typically 14-21 days notice)
• Stamp duty payable
• Title transfers to you

Deposit Structure

Off-the-plan deposits work differently from established property purchases:

Standard structure:

• 10% at exchange: Paid when you sign the contract
• Balance at settlement: Remaining 90% due when building completes

Some developers offer:

• 5% at exchange + 5% at later milestone
• 10% at exchange + additional payments during construction
• Extended settlement terms

For foreign buyers:

• Banks typically require 30-40% deposit for loan approval
• The gap between 10% contract deposit and 30%+ finance deposit must come from your own funds
• Plan your capital position for settlement, not just exchange

Timeline Expectations

Development Type	Typical Construction Period
High-rise apartment (20+ floors)	24-36 months
Mid-rise apartment (5-15 floors)	18-24 months
Townhouse development	12-18 months
House-and-land package	6-12 months

Warning: These are estimates only. Delays are common, and some projects experience 6-12+ month extensions due to weather, labour shortages, supply chain issues, or developer problems.

FIRB Requirements for Off-the-Plan

Standard FIRB Approval

Foreign buyers need FIRB approval before purchasing off-the-plan property. The application should be submitted before signing the contract, or the contract must be conditional on FIRB approval.

Application fees for new dwellings (2025/26):

Property Value	FIRB Fee
Up to $1M	$15,100
$1M to $2M	$30,300
$2M to $3M	$60,600
$3M to $4M	$90,900
$4M to $5M	$121,200
$5M to $10M	$272,700

Processing time: Typically 30 days, though complex applications may take longer.

Key point: FIRB fees for new dwellings (including off-the-plan) are significantly lower than the tripled fees for established dwellings. This is deliberate policy to encourage foreign investment in new housing stock.

Developer Exemption Certificates

Many developers obtain New Dwelling Exemption Certificates from FIRB, which streamline the process for foreign buyers.

How it works:

1. Developer applies to FIRB for exemption certificate covering their development
2. FIRB issues certificate allowing sales to foreign persons
3. Foreign buyers don't need individual FIRB approval
4. Developer collects FIRB fee equivalent from buyer
5. Developer reports sales to ATO

Advantages:

• Faster purchase process (no 30-day FIRB wait)
• Certainty of approval
• Simpler paperwork

Your obligations remain:

• Must notify ATO within 30 days of purchase
• Subject to same conditions as standard approval
• Vacancy fee obligations still apply

Important: Always confirm the developer holds a valid exemption certificate before assuming you don't need FIRB approval. Ask for the certificate number and verify it covers your specific dwelling type.

Complete Cost Breakdown: Off-the-Plan Purchase

Let's work through a realistic example to show actual costs.

Example: $750,000 Off-the-Plan Apartment in Sydney

Property details:

• 2-bedroom apartment in inner-west Sydney
• Expected completion: 24 months from contract
• Developer holds FIRB exemption certificate

Upfront Costs at Exchange:

Cost Item	Amount	Notes
Deposit (10%)	$75,000	Held in trust until settlement
FIRB fee equivalent	$15,100	Collected by developer
Legal review	$1,500	Contract review before signing
Total at exchange	$91,600

Costs at Settlement (24 months later):

Cost Item	Amount	Notes
Balance of purchase	$675,000	Remaining 90%
NSW stamp duty	$29,585	Standard transfer duty
Foreign buyer surcharge (9%)	$67,500	NSW surcharge rate
Legal/conveyancing	$2,000	Settlement costs
Loan establishment	$1,000	If financing
Total at settlement	$775,085

Total Investment:

Category	Amount
Property price	$750,000
FIRB fee	$15,100
Stamp duty (total)	$97,085
Legal costs	$3,500
Loan costs	$1,000
Total acquisition cost	$866,685
As % of purchase price	115.6%

The 15.6% additional cost is typical for foreign buyers in NSW. In states with lower surcharges, this percentage drops.

State-by-State Surcharge Comparison

For the same $750,000 off-the-plan apartment:

State	Base Stamp Duty	Foreign Surcharge	Total Stamp Duty	Savings vs NSW
NSW	$29,585	$67,500 (9%)	$97,085	—
VIC	$40,070	$60,000 (8%)	$100,070	-$2,985
QLD	$24,600	$60,000 (8%)	$84,600	$12,485
SA	$32,330	$52,500 (7%)	$84,830	$12,255
WA	$29,570	$52,500 (7%)	$82,070	$15,015
TAS	$30,488	$60,000 (8%)	$90,488	$6,597
ACT	$26,440	$0 (0%)	$26,440	$70,645
NT	$18,875	$0 (0%)	$18,875	$78,210

Key insight: For equivalent properties, ACT and NT offer massive savings through zero foreign buyer surcharges. However, property markets in these territories are smaller with different growth dynamics.

Critical Risks Every Foreign Buyer Must Understand

Off-the-plan purchases carry risks that don't exist with completed properties. Understanding these risks—and how to mitigate them—is essential.

Risk 1: Sunset Clause Exploitation

What it is: A sunset clause allows either party to rescind (cancel) the contract if settlement hasn't occurred by a specified date.

The risk: In rising markets, unscrupulous developers have used sunset clauses to cancel contracts, refund deposits, and resell at higher prices to new buyers—locking you out of capital gains.

Recent reforms: Most states have introduced legislation requiring developers to obtain buyer consent or court/tribunal approval before exercising sunset clauses. However, protections vary by state and aren't absolute.

How to protect yourself:

• ✅ Negotiate a longer sunset period (3-4 years rather than 2)
• ✅ Include a clause requiring developer to offer you the property at the higher price before rescinding
• ✅ Research the developer's track record on sunset clause behaviour
• ✅ Have your lawyer specifically review sunset provisions
• ✅ Monitor construction progress throughout the build

Risk 2: Valuation Shortfall at Settlement

What it is: When your property completes, the bank orders a valuation. If the valuer determines the property is worth less than your contract price, the bank will only lend against the lower valuation.

The risk: You need to make up the difference from your own funds—potentially tens of thousands of dollars—at short notice.

Why it happens with off-the-plan:

• Market conditions change during 2-3 year construction period
• Oversupply in the development's area
• Comparable sales come in lower than expected
• Developer may have priced aggressively for early sales

Example:

• Contract price: $750,000
• Bank valuation at settlement: $700,000
• Bank will lend 70% of $700,000 = $490,000
• You expected to borrow 70% of $750,000 = $525,000
• Shortfall: $35,000 additional cash needed

How to protect yourself:

• ✅ Don't pay more than 5-10% above comparable recent sales
• ✅ Research the area's supply pipeline (how many similar apartments coming)
• ✅ Maintain a cash buffer beyond your expected deposit requirement
• ✅ Get an independent valuation before signing (costs $300-600)
• ✅ Avoid developments in areas with known oversupply

Risk 3: Construction Delays

What it is: The building takes longer to complete than originally estimated.

The risk: Delays can cascade into other problems:

• Finance pre-approval expires (typically valid 3-6 months)
• Interest rates change, affecting serviceability
• Your personal circumstances change
• Capital is tied up longer than planned
• Rental income delayed

Common causes:

• Weather events
• Labour shortages (ongoing in Australian construction)
• Supply chain disruptions
• Council approval delays
• Developer financial difficulties

How to protect yourself:

• ✅ Research developer's track record on delivery times
• ✅ Build flexibility into your finance timeline
• ✅ Don't commit capital you'll need before realistic completion
• ✅ Include delay notification requirements in contract
• ✅ Understand your termination rights if delays exceed certain thresholds

Risk 4: Developer Insolvency

What it is: The developer goes bankrupt before completing your building.

The risk: Depending on timing and circumstances:

• Your deposit may be at risk (though trust account requirements provide some protection)
• Project may be abandoned or significantly delayed
• New developer may change specifications or pricing
• Legal costs to recover your position

How to protect yourself:

• ✅ Research developer's financial position and track record
• ✅ Look for developers with multiple successful completions
• ✅ Ensure deposit is held in a statutory trust account (legally required in most states)
• ✅ Check if the development has construction finance secured
• ✅ Avoid first-time developers for large projects
• ✅ Consider deposit guarantee insurance if available

Risk 5: Building Defects

What it is: Construction quality issues discovered after settlement.

The risk: Australia has experienced significant building defect issues in recent years, particularly in high-rise apartments. Problems include:

• Waterproofing failures
• Structural cracking
• Fire safety non-compliance
• Cladding issues
• Balcony defects

Recent high-profile examples have resulted in building evacuations, special levies exceeding $100,000 per owner, and years of legal disputes.

How to protect yourself:

• ✅ Research the builder (separate from developer) and their track record
• ✅ Check if the builder has adequate insurance
• ✅ Review the building certifier's history
• ✅ Understand warranty periods and coverage
• ✅ Commission an independent defect inspection before settlement
• ✅ Join or monitor the owners corporation from day one
• ✅ Act quickly on any defects within warranty periods

Risk 6: Specification Changes

What it is: The finished product differs from what was shown in marketing materials.

The risk: Developers typically reserve the right to make "reasonable" changes to specifications. This might include:

• Different appliance brands
• Changed finishes or colours
• Altered common area designs
• Modified layouts (within limits)

How to protect yourself:

• ✅ Carefully review "developer's rights to vary" clauses in contract
• ✅ Get specific inclusions listed in the contract (not just marketing brochures)
• ✅ Understand what constitutes "substantially similar"
• ✅ Document everything promised during the sales process
• ✅ Know your rights to compensation for material changes

Due Diligence Checklist for Off-the-Plan

Before signing any off-the-plan contract, work through this checklist:

Developer Research

• [ ] Company history and registration details (ASIC search)
• [ ] Previous projects completed (visit if possible)
• [ ] Online reviews and media coverage
• [ ] Financial position indicators
• [ ] Current projects in progress
• [ ] Litigation history
• [ ] Key personnel background

Builder Research

• [ ] Builder's licence current and valid
• [ ] Insurance coverage (Home Building Compensation Fund or equivalent)
• [ ] Track record on similar projects
• [ ] Defect history on previous builds
• [ ] Current workload (overcommitment risk)

Market Analysis

• [ ] Comparable sales in the area (recent off-the-plan settlements)
• [ ] Supply pipeline (how many similar developments in progress)
• [ ] Current vacancy rates in the suburb
• [ ] Rental demand indicators
• [ ] Infrastructure and amenity development
• [ ] Population growth trends

Contract Review (with your lawyer)

• [ ] Sunset clause terms and your protections
• [ ] Developer's variation rights
• [ ] Deposit arrangements (trust account confirmation)
• [ ] Settlement terms and notice periods
• [ ] Defect rectification obligations
• [ ] Penalty provisions for delays
• [ ] Termination rights and conditions
• [ ] FIRB condition (if not using exemption certificate)
• [ ] Finance clause (if applicable)

Financial Planning

• [ ] Total acquisition cost calculated (including all surcharges)
• [ ] Settlement funds confirmed and accessible
• [ ] Finance pre-approval obtained
• [ ] Buffer for valuation shortfall (10-15% of purchase price)
• [ ] Holding costs budgeted (if settlement before tenant found)
• [ ] Currency risk assessed (if funds coming from overseas)

Financing Off-the-Plan as a Foreign Buyer

Securing finance for off-the-plan as a foreign buyer involves unique challenges.

The Pre-Approval Challenge

Banks will provide pre-approval for off-the-plan purchases, but:

• Pre-approval validity: Typically 3-6 months
• Construction period: 12-36 months
• Problem: Your pre-approval will expire well before settlement

Solution: Treat pre-approval as an indicator, not a guarantee. You'll need to reapply closer to settlement, when:

• Interest rates may have changed
• Your circumstances may have changed
• Bank policies may have tightened
• Property valuation will be conducted

Typical Foreign Buyer Loan Requirements

Requirement	Typical Range
Deposit	30-40%
LVR (Loan-to-Value Ratio)	60-70% maximum
Interest rate premium	0.5-1.5% above standard
Income documentation	Extensive (translated, verified)
Lender options	Limited (major banks often won't lend)

Strategies for Success

Start the formal application 3-4 months before expected settlement:

• Developer gives you notice of expected completion
• Apply to lender with current documentation
• Valuation ordered
• Approval confirmed before settlement deadline

Have backup options:

• Identify 2-3 potential lenders willing to lend to foreign buyers
• Understand their requirements in advance
• Maintain flexibility on deposit amount

Maintain cash reserves:

• Buffer for valuation shortfall (10-15%)
• Funds for stamp duty and costs
• First 3-6 months of holding costs if property vacant initially

Stamp Duty Timing: When Do You Pay?

Stamp duty timing varies by state, which affects your cash flow planning.

State-by-State Timing

State	When Stamp Duty is Calculated	When Payment is Due
NSW	Contract date (price at exchange)	Within 3 months of exchange
VIC	Contract date	Within 30 days of settlement
QLD	Contract date	Within 30 days of settlement
SA	Contract date	Within 60 days of settlement
WA	Settlement date	Within 30 days of settlement
TAS	Contract date	Within 3 months of exchange
ACT	Contract date	Within 14 days of exchange
NT	Settlement date	Within 60 days of settlement

Key implication for off-the-plan:

In states where stamp duty is calculated on contract date (NSW, VIC, QLD, SA, TAS, ACT):

• You pay duty on the contract price
• Even if the property is worth more at settlement
• Protects you if values rise during construction

In states where stamp duty is calculated on settlement date (WA, NT):

• Duty based on value/price at completion
• If values rise, you may pay more duty
• If values fall, you may pay less

However: Most off-the-plan contracts use the contract price for duty calculation regardless of state, as no separate settlement valuation is typically conducted for new dwellings sold by developers.

Case Study: $700,000 Brisbane Off-the-Plan Apartment

Let's walk through a complete scenario.

The Purchase

Buyer: Chen Wei, Singapore citizen, temporary resident (482 visa) Property: 2-bed apartment in South Brisbane, near Cross River Rail Price: $700,000 Developer: Established Brisbane developer with exemption certificate Expected completion: 26 months

Timeline and Costs

Month 0 – Contract Exchange:

• Deposit (10%): $70,000
• FIRB fee equivalent: $15,100
• Legal review: $1,200
• Cash required: $86,300

Months 1-26 – Construction Period:

• Monitor progress updates from developer
• Arrange Australian bank account
• Prepare for finance application
• Transfer additional funds for settlement

Month 22 – Finance Application:

• Apply for loan with foreign-buyer-friendly lender
• Submit income documentation (Singapore employment)
• Bank valuation ordered

Month 24 – Valuation Result:

• Bank values property at $680,000 (4% below contract)
• Bank will lend 70% = $476,000
• Expected loan was 70% of $700,000 = $490,000
• Shortfall: $14,000 additional cash needed

Month 26 – Settlement:

Item	Amount
Balance of purchase price	$630,000
Less: Bank loan	-$476,000
Cash required for balance	$154,000
QLD stamp duty	$24,600
Foreign buyer surcharge (8%)	$56,000
Legal/conveyancing	$2,200
Loan costs	$800
Total cash at settlement	$237,600

Total Cash Required:

• At exchange: $86,300
• At settlement: $237,600
• Total: $323,900 (46% of purchase price)

Investment Analysis (5-Year Hold)

Assumptions:

• 5% annual capital growth
• $550/week rent (4.1% yield)
• 3% annual rental growth
• All costs as foreign investor

5-Year Projection:

Year	Property Value	Annual Rent	Net Cash Flow
1	$735,000	$28,600	-$8,200
2	$771,750	$29,458	-$6,800
3	$810,338	$30,342	-$5,300
4	$850,854	$31,252	-$3,700
5	$893,397	$32,190	-$2,000

Exit Analysis (Year 5):

• Sale price: $893,397
• Less: Agent fees (2%): -$17,868
• Less: Legal costs: -$2,500
• Less: Loan payout: -$476,000
• Less: CGT (32.5% on $193,397 gain): -$62,854
• Net proceeds: $334,175

Total Return:

• Cash invested: $323,900
• Net proceeds at sale: $334,175
• 5 years negative cash flow: -$26,000
• Net profit: -$15,725

Wait—that's a loss?

This example illustrates a critical point: modest capital growth combined with high foreign buyer costs and negative cash flow can result in poor returns, even on a property that "increased in value."

Better outcome would require:

• Higher capital growth (7%+ annually)
• Stronger rental yield (4.5%+ gross)
• Lower interest rates
• Longer hold period (10+ years)

This is why accurate cost calculation and realistic return projections matter enormously.

Frequently Asked Questions

Q: Can I sell my off-the-plan contract before settlement?

A: This depends on the contract terms. Some developers allow "assignment" or "nomination" (transferring the contract to another buyer), while others prohibit it. If allowed, you may be able to sell your contract—potentially at a profit if values have risen—without ever settling. However:

• Developer consent usually required
• Assignment fees may apply
• New buyer must also meet FIRB requirements if foreign
• Capital gains tax may apply on any profit

Q: What happens if I can't settle on time?

A: If you fail to settle by the required date, you're in breach of contract. Consequences typically include:

• Forfeit of deposit (10% of purchase price)
• Developer may sue for additional damages
• You may lose any capital appreciation
• Legal costs

This is why maintaining settlement capacity is critical.

Q: Are display apartments a good deal?

A: Display apartments can offer value because:

• Often discounted (developer wants to sell quickly after display period)
• You can physically inspect before buying
• Usually upgraded with premium finishes
• No construction risk

However, watch for:

• Wear and tear from high traffic
• Potential to be classified as "established" if used too long (affecting FIRB eligibility)
• May have been used as site office (check usage history)

Q: Should I buy in the first release or wait?

A: First release advantages:

• Often the best prices (developer needs early sales to secure finance)
• Best unit selection (floor, aspect, position)
• Longest time for capital appreciation during construction

Later stages advantages:

• Can see construction progress
• Market conditions clearer
• May benefit from first-release buyer experiences
• Shorter wait to settlement

For foreign buyers, first release often makes sense because it maximises time between exchange and settlement—valuable for arranging finance and funds.

Q: How do I inspect the property before settlement?

A: Standard process:

1. Pre-settlement inspection: You're entitled to inspect the completed property before settlement (usually 1-2 weeks before)
2. Defect list: Document any defects, damage, or items not matching specifications
3. Defect rectification: Minor defects typically rectified within 3-6 months
4. Major defects: Can potentially delay settlement or negotiate compensation

For foreign buyers who can't attend personally, appoint a buyer's agent or inspector to conduct the inspection on your behalf.

Q: What if the completed apartment looks different from the marketing renders?

A: Marketing materials often include "artist's impressions" that may differ from the final product. Your contract will specify what's actually included. Key protections:

• Contracts should list specific inclusions
• "Subject to change" clauses have limits
• Material changes may entitle you to compensation or termination
• Keep all marketing materials as evidence
• Have your lawyer review variation clauses before signing

The Bottom Line: Is Off-the-Plan Right for You?

Off-the-plan purchases suit foreign buyers who:

✅ Accept the risks – You understand and can manage sunset clauses, valuation gaps, delays, and defect risks

✅ Have time – You don't need immediate accommodation or rental income

✅ Have financial buffer – You can cover 10-15% valuation shortfall if needed

✅ Want tax benefits – Depreciation maximises your deductions

✅ Have done the research – You've analysed the developer, builder, market, and contract thoroughly

Off-the-plan may not suit you if:

❌ You need certainty – You can't tolerate construction delays or specification changes

❌ Capital is tight – You have exactly enough for the expected costs with no buffer

❌ You can't monitor remotely – You have no way to track progress or inspect before settlement

❌ You're buying in an oversupplied area – High risk of valuation shortfall and poor returns

Calculate Your Off-the-Plan Investment

Every development is different. Use our FIRB Calculator to model your specific scenario:

What you'll get:

• Complete upfront and settlement cost breakdown
• State-by-state stamp duty comparison
• FIRB fee calculation
• Cash flow projections
• Return on investment analysis
• Comparison with alternative properties

Calculate your off-the-plan costs →

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Additional Resources

• FIRB Fees Explained: Complete 2025 Breakdown
• State-by-State Foreign Buyer Stamp Duty Surcharges
• New vs Established Property: Which Can You Buy?
• Temporary Resident vs Foreign Investor: FIRB Rules by Visa
• Complete FIRB Guide 2025

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Disclaimer: This guide provides general information only and should not be relied upon as legal, financial, or investment advice. Off-the-plan purchases involve significant risks that vary by development, developer, state, and individual circumstances. Property values can go down as well as up. Always engage qualified professionals including property lawyers, financial advisors, and buyer's agents before making any property purchase decisions. Verify all fees, rates, and regulations with official sources as they are subject to change.

Last updated: January 2025. FIRB fees based on 2025/26 financial year. Foreign buyer surcharges current as of January 2025.