Off-the-Plan and Buying Your First Home in Midland

How Off-the-Plan Purchases Work for First Home Buyers

Buying off-the-plan means you sign a contract and pay a deposit before the property is built or completed. Settlement happens months or sometimes years later, once the developer finishes construction and the property is titled. For first home buyers in Midland, this structure unlocks access to new apartments and townhouses in developments near the train station and along the Great Eastern Highway corridor, but it also means your finance needs to be structured differently than it would for an established home.

The gap between contract and settlement creates timing challenges that don't exist when you buy a completed property. Your income, employment, and deposit might all change between signing and settlement, and lenders assess your application twice: once at pre-approval and again just before you take ownership. Consider a buyer who signed a contract for a two-bedroom apartment in one of the newer complexes near Midland Gate in late 2025 with a settlement scheduled for mid-2027. They obtained pre-approval at contract, but when settlement approached, their lender reassessed their income and liabilities. In the interim, they had changed jobs and taken on a car loan. Their borrowing capacity had reduced, and they needed to provide updated payslips, a new employment letter, and evidence that their deposit funds were still available. The loan was approved, but only after they paid down part of the car loan to meet serviceability.

Deposit Requirements and the 5% Deposit Scheme

Most first home buyers purchasing off-the-plan will use the Australian Government 5% Deposit Scheme. You can buy with a 5% deposit without paying Lenders Mortgage Insurance, provided the property price is within the applicable cap for Western Australia. For Midland, which falls within the Perth metropolitan postcode area, the property price cap is $850,000. Both the contract price and the lender's valuation at settlement must stay under that cap.

The 5% deposit is paid in stages. A smaller initial deposit, often 5% to 10% of the contract price, is paid to the developer when you sign the contract. The balance of your deposit is paid at settlement. For a contract price of $500,000, you might pay $25,000 upfront and hold the remaining funds in a savings account or offset until settlement. Some lenders require the full deposit to be held in your name and unencumbered from contract date through to settlement. Others are more flexible if the funds are in an offset account linked to a parent's loan, provided you can access them when required.

Stamp Duty Concessions on Off-the-Plan Properties

Western Australia offers two separate concessions that can apply to first home buyers purchasing off-the-plan. You may be eligible for one or both, depending on your circumstances.

The First Home Owner Rate of duty applies to first home buyers purchasing or building a new home. For transactions entered into from 7 May 2026, no duty is payable on homes valued up to $600,000, and a concessional rate applies on homes valued between $600,001 and $800,000. The maximum dutiable value to access this concession is $800,000. This concession is not limited to off-the-plan purchases and applies to any eligible first home buyer purchasing a new home, including house and land packages.

The off-the-plan duty concession applies to all buyers, not just first home buyers, purchasing a new dwelling off-the-plan or under construction in a strata, survey-strata, or community titles scheme. For pre-construction contracts entered into from 12 March 2026, a 100% concession capped at $50,000 applies on dwellings valued up to $800,000. The concession reduces proportionally between $800,001 and $899,999, then holds at 50% for dwellings valued at $900,000 or more. If the property is already under construction when you sign the contract, the concession is 75% rather than 100% for properties up to $800,000.

If you are a first home buyer purchasing a new apartment or townhouse off-the-plan in Midland valued under $600,000, you will generally pay no stamp duty under the First Home Owner Rate. If the property is valued between $600,001 and $800,000, you may receive a partial concession under the First Home Owner Rate, and the off-the-plan concession may also reduce or eliminate the remaining duty depending on the property's value and construction status. Your conveyancer or settlement agent will calculate which combination of concessions delivers the lowest duty payable.

Valuation Risk and Settlement Shortfalls

Valuation risk is the gap between the contract price and the lender's assessed value of the property at settlement. If the lender values the property below the contract price, you may need to increase your deposit to maintain the same loan-to-value ratio. For example, a buyer contracts to purchase an apartment for $520,000 with a 5% deposit of $26,000. At settlement, the lender values the property at $490,000. To borrow 95% under the 5% Deposit Scheme, the buyer can only borrow $465,500. They now need to find an additional $28,500 to cover the shortfall between the loan amount and the contract price. The total cash required at settlement becomes $54,500 instead of $26,000.

Valuation shortfalls are more common in off-the-plan purchases than in established property purchases because the lender's valuation is done at or near settlement, often 12 to 24 months after you signed the contract. Market conditions, comparable sales, and the final quality of the build all influence the valuation. Some developments in Midland have settled in line with contract prices, while others have faced valuation pressure, particularly in larger apartment complexes where multiple units settled simultaneously and created a temporary oversupply of comparable sales data.

To manage this, hold a buffer above your minimum deposit. If you are buying with a 5% deposit, aim to have access to 7% to 8% of the contract price by settlement. Keep these funds in an accessible savings account or offset, and avoid committing them to other purchases or investments before settlement occurs.

Loan Features and Pre-Approval Timing

Loan features such as offset accounts and redraw facilities are available on most home loan options for off-the-plan purchases, but availability depends on the lender and whether you are using a fixed or variable interest rate. Offset accounts are typically available on variable rate loans and allow you to park your remaining savings in an account linked to your loan, reducing the interest you pay. Redraw facilities let you access extra repayments you have made above the minimum. If you are splitting your loan between fixed and variable rates, the offset will usually only link to the variable portion.

Pre-approval is valid for three to six months depending on the lender. If your settlement date is 18 months away, you will need to reapply or extend your pre-approval closer to settlement. Some lenders offer longer conditional approvals for off-the-plan purchases, but these are not formal approvals and still require full reassessment before settlement. Apply for pre-approval once the development has received finance approval from the lender's credit team. Not all lenders will finance all developments, particularly if the developer is new, the project is large, or the deposit structure is non-standard.

Sunset Clauses and Construction Delays

A sunset clause is a date written into the contract after which either party can withdraw if the development has not reached practical completion. Developers use sunset clauses to exit contracts if market conditions change or construction costs increase. Buyers can use the same clause if they no longer want to proceed, but only after the sunset date has passed.

Construction delays are common. If your contract stated settlement in June 2027 but the development does not reach completion until December 2027, you remain bound by the contract unless the sunset clause has passed. Your pre-approval will expire, and you will need to reapply. If interest rates have increased or your financial circumstances have changed, you may no longer be able to borrow the same amount. You cannot withdraw from the contract without forfeiting your deposit unless the sunset clause allows it.

Some contracts include extensions to the sunset clause that the developer can trigger without your consent. Review the contract with a settlement agent or solicitor before signing, and confirm the sunset date and any extension clauses. If the sunset date is more than three years from the contract date, consider whether you are comfortable being locked into the purchase for that length of time.

The First Home Owner Grant and Off-the-Plan Eligibility

The First Home Owner Grant in Western Australia is $10,000 for buyers purchasing or building a new home. The grant applies to off-the-plan purchases provided the property is a new dwelling and the purchase price is within the applicable cap. For properties located south of the 26th parallel, which includes Midland, the cap is $800,000. For properties north of the 26th parallel, the cap is $1,000,000.

You apply for the grant through your settlement agent, usually four to eight weeks before settlement. At least one applicant must be an Australian citizen or permanent resident, and you must occupy the property as your principal place of residence for at least six continuous months starting within 12 months of settlement. If you sign the contract but do not settle, you are not eligible for the grant. The grant is paid at settlement and can be used to reduce the cash you need to bring to settlement or directed into your loan offset account.

Structuring Your Application Around Settlement Date

Your loan application is assessed twice: at pre-approval and again at settlement. Lenders will reassess your income, employment, liabilities, and deposit source closer to settlement. Do not change jobs, take on new debt, or reduce your income between contract and settlement unless unavoidable. If you do need to change jobs, inform your broker immediately and provide updated employment details to your lender. Some lenders require you to complete a probation period in a new role before they will settle the loan.

Deposit funds must be genuinely saved or gifted. Lenders require at least three months of savings history, and some require six months. If a family member is gifting part of your deposit, obtain a signed gift letter and transfer the funds into your account at least three months before settlement. Borrowed deposit funds are not acceptable under the 5% Deposit Scheme. If you are using the First Home Super Saver Scheme, apply for the release of funds from the ATO at least 25 business days before settlement to avoid delays.

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