Property Investment
5 min read
When you buy a property off-the-plans, you buy it before it’s built.
So, you can’t walk through it … or see exactly what you’re buying. Instead, you look at the contract and see what the developer has promised to build.
Most of the time, what you expect to buy is what gets built.
But, developers can change parts of the property after you sign on the dotted line. That surprises some investors because their house might look slightly different from pictures (the renders).
In this article, you’ll learn the common changes developers make during construction. You’ll also learn why they happen, and what you can do if you’re unhappy about it.
Here are some of the most common changes developers make to properties while they’re being built:
Sometimes developers change the layout. For instance, the direction of the staircase could change. Or maybe the kitchen bench, originally planned as an island, gets extended to touch the wall.
These changes seem small, but some investors really care about these details. And it’s annoying if you’re not expecting it.
I get it. Some times buyers fall in love with specific design elements – like a large window in the lounge. If it’s changed or removed, it can feel like a deal-breaker.
Developers sometimes swap materials. This happens if they can’t get exactly what they want from the suppliers.
For example, an investor I recently worked with was annoyed. The developer had built the fence, but it changed colour.
That’s because the developer planned to build a timber fence, but the exact timber in the renders wasn’t available, so it had to be replaced with a different material. That’s why the colour changed.
Investors will sometimes look at the render the developer shows and thinks: “That’s exactly what it will look like.”
And some times investors say: “This finished property looks so much better than the pictures.”
But, other times small differences can really annoy investors.
Another investor I worked with loved the curtains in the render for a property they were buying (the picture showed flowing white linen curtains).
But in the contract it said the property came with blackout roller blinds.
So you’d forgive him for thinking: “But, it has white curtains in the pictures!”
It’s important to remember, renders are an artist’s impression only. While they are usually pretty close to the mark, there will be some differences.
And in this case, blinds are often a cheaper option for investors, so this tends to keep the price of the property and maintenance costs down.
Your property may be slightly larger or smaller than expected. Often developers can change the size of your property by about 5%.
This happened to an Auckland investor I recently worked with. Their lounge was marginally (we’re talking centimetres) smaller than originally planned.
Unfortunately, they bought a couch for the space before the property was finished, and in the original floor plan the couch would just fit. But, after a small alteration to the floor plan, the couch didn’t fit.
The investor knew she agreed to a clause that gave the developer this wiggle room, but she was still upset about her couch.
Let’s say your contract includes SMEG, or Fisher & Paykel appliances. If that specific model is out of stock, the developer may substitute it with a similar-quality alternative.
For instance, if SMEG isn’t available, you should still get an equivalent brand.
Some investors are particular about appliance brands. So you might think: “I don’t want Fisher & Paykel, I want SMEG.”
The developer will always try to get a similar brand.
If the developer has got a much, much cheaper brand, then you 100% should complain. But developers are often allowed to swap brands; that’s often outlined in the contract.
Every contract is written differently, but most contain clauses that allow for reasonable changes. Here are two examples:
This clause says the developer will build the property as planned and to a good standard.
But it also says the developer can swap materials for similar ones … and the buyer can’t say “no”.
As long as the developer doesn’t significantly lower the property’s value or quality, they can make changes.
This clause basically says the developer can make changes to the plans or materials if needed, but only if they don’t significantly affect the property’s use.
The buyer can’t object, request a price change, or ask for compensation.
Most, if not every, single off-the-plan property will have some sort of minor change.
I hear you, those contract clauses can sound scary.
And yes, contracts do give developers a lot of flexibility in the fine print, but they do need some flexibility.
Sometimes they need to change things to keep the council happy. Other times it might be to keep the build moving.
Let’s say a particular material isn’t available at the moment. If you have to wait for the original material to come to NZ … the house may never be built.
But it is important to be comfortable with the clauses in your contract. An experienced lawyer can make sure the contract isn’t too heavily skewed in the developer’s favour.
You do get protections as a buyer.
If the developer’s changes significantly impact the property’s:
You may be able to get out of the contract or seek legal action.
That would happen if you signed up to buy a three-bedroom townhouse, then the developer changed it so it now only has two.
There was another case I helped a first home buyer with. The developer switched the front door to a sliding door.
The buyer was very unhappy and argued it reduced the value and function of the property. She got let out of the contract and decided not to buy it.
However, the definition of a “major” change is subjective. This is why working with reputable developers is crucial.
Often investors don’t need to worry.
I get why investors sometimes find this disheartening, or upsetting.
The trick is to try not to get too caught up in small, cosmetic changes.
What matters is that the property is still:
Investors should focus on the bigger picture. Is the property delivering on the investment strategy?
Minor differences can feel frustrating, but they usually don’t impact the long-term financial benefits.
And because there is as bit more risk buying off the plans, you often get a better price than if you bought the same property once it’s built.
Licensee (Eligible Officer) and Team Leader for Opes Property
Brittany graduated from the University of Auckland with a Bachelor of Property and later became a qualified financial adviser. She's now the licensee (eligible officer) and team leader for Opes Property.
