We spend more on housing

Housing occupancy data shows that Australians are paying more for the roof over their heads. Households with mortgages spent a monthly median of $1,300 on repayments in 2006, with this figure increasing to $1,800 per month in 2011 – an increase of 38.5% in the five year period. Similarly, the number of households with a mortgage has increased by 11.2% in that same time.

In terms of rent payment, there is a 50% increase in median weekly rent paid by households in 2011 compared to five years before. Between 2006 and 2011, the number of households renting had increased by 14.3%.

In contrast to the increase in rent and mortgage repayment, the average household income only rose by 19.5%. It is not surprising then that in 2011 fewer people own a property outright than in 2006 as we are now spending more on housing overall. According to the latest data 34.9% of dwellings were owned with a mortgage while 32.1% of dwellings were owned outright and 29.6% of properties were rented. Clearly when the Reserve Bank moves the cash rate it has more pronounced effects on incomes and the broader economy than in the past.

The higher rents and mortgage repayments presumably bring changes to how people live. More children are staying home longer with their parents and more seniors are living with their children –resulting in more people occupying the average home than there was five years ago. This means that for the first time since European settlement, the utilisation of our homes has increased.

What sort of housing structures do we prefer to live in?

The Census stats also showed us that more Australians are living in higher density housing structures such as townhouses, flats, units and apartments. Of all the occupied private dwellings, the number of semi-detached, row or terrace house and townhouse dwelling structures saw the highest increase, rising by 16.3% (107,120) between 2006 and 2011 – more than twice the rate of the rise of separate house dwelling structures. This was followed by high density housing structures such as flats, units and apartments, with an increase of 13.2% (123,374) from 2006 to 2011.

All this however doesn’t mean that we should discard stand-alone (detached) houses. Although the number of people living in separate dwellings has only increased by 7.2% (392,046), this type of dwelling is home to 75.6% of the population.

Source: ABS, Allianz

Tickets to Empire

Managing Director Ariel Brukarz will be treating his mum to see Empire, the gravity defying, sanity defying show that smashes through the borders of comedy, circus and burlesque. Direct from its world premiere hit season at Broadway and presented in the SPIEGELWORLD carnival atmosphere with its beautifully historical Spiegeltent and speakeasy bar, this will be a sure winner! For more info and ticket sales, visit: http://premier.ticketek.com.au/Shows/ShowNE.aspx?sh=EMPIRE13

Kikki K Travel Gift Set

Although Mother’s Day falls on a different date in her native homeland of Indonesia; Marketing Coordinator Sasri Priyono thought a travel gift set from Kikki K would be perfect for globetrotter mums like hers. This gorgeous Travel Gift Pack features a limited edition canvas travel wallet, limited edition luggage tag and a stylish metal rollerball pen. For more info and to view other products by Kikki K, visit: http://www.kikki-k.com/gifts/gift-finder/for-mum/travel-gift-pack-blomsterang

Personalised jewellery

You know what they say –diamonds are a girl’s best friend. For Mother’s Day, Client Relations manager, Rachel Mithen is buying her mother a beautiful personalised diamond set necklace with hers and her sister’s name engraved on it from Bevilles. The necklace comes with .925 sterling silver and three diamonds. You can never go wrong with that! To order one, visit: http://www.bevilles.com.au/personalised/love-mum/personalied-diamond-set-necklace.html 

A 28pc Ladies Pink Tool Kit

Handpicked by Marketing Director Nurit Brukarz, this gift would be perfect for all the handy (and not so handy) mums out there. This 28 piece tool kit comes with all the essential tools – hammer, flat-bladed screwdrivers, Phillips head screwdrivers, long nose pliers, spirit level, tape measure and multi-purpose 19pc bit set plus adaptor. The toolkit also comes with its own folding case, so all tools remain together and can be slipped away for easy storage. The best part is that it all comes in a gorgeous shade of pink!
For more details, visit: http://www.latestbuy.com.au/pink-lady-tool-kit.html

One of a kind gift

Why not impress your mother with a one of a kind novelty gift? Sales Consultant Robert Bromley found this wine bottle that looks like a wine glass with a cheeky message while browsing online for gift ideas. Another source of quirky gifts that we love is Hart and Heim at Melbourne Central. Visit their website here and shop online:  http://hartandheim.com.au/

Pizza making class at The Grosvenor Hotel

Our Property Management Director Ernie Caputa will be taking his mum out for a hands-on workshop that will teach her about the art of making the perfect Italian pizza. From making and stretching the dough, to creating your own delicious pizza masterpiece, everyone will have a great time learning tips and tricks from head chef Emile Avramides. For more info and booking, visit: http://us6.campaign-archive2.com/?u=e4c4afc16a2773c18ac7bb57c&id=a10dd6ce50&e=a326f35b43

Lunch buffet at Sky High Mt Dandenong

Another great way to spend Mother’s Day is to treat mum to a nice lunch away from the hustle and bustle of the city. Property Management Assistant Niki Doriean will be taking her mother on a divine lunch overlooking Melbourne City at Sky High. Located on the uppermost reach of the Dandenong Ranges, Sky High is the perfect place to get some perspective and escape the noise and pressure of the concrete jungle. For more details and bookings, visit: http://www.skyhighmtdandenong.com.au/mothers-day.aspx

Special Yum Cha lunch

“My mum loves Yum Cha!” says Sales Consultant Terence Rosenfield. What better way is there to spend Mother’s Day than to do what she loves best? Terence will be taking his mother to their favourite Yum Cha place in the Eastern suburbs. For those who prefer to enjoy Yum Cha closer to the city, we would recommend Neil Perry’s Spice Temple at Crown Entertainment Complex: http://www.spicetemplemelbourne.com/

Home-cooked lunch, accompanied by premium wine and cocktail

If you believe that a way to a person’s heart is through their stomach, why not cook something special for Mother’s Day? Sales Consultant Glenn Campbell will be cooking a very special meal for two special ladies on this day –his mum and his lovely wife. Glenn will also be making his specialty cocktails for the day. To get you inspired, Glenn has also shared his Long Island Ice Tea recipe – a special cocktail to get your Mum enjoying the day:

Ingredients:
30 ml Grey Goose Vodka
30 ml Gordons Gin
15 ml White Tequila
30 ml Cointreau
30 ml Bacardi Rum
15 ml Fresh Lemon Juice
Coca-Cola
Fresh Lime and mint

Directions: 
Pour all spirits and lemon juice into a chilled cocktail shaker over 5 ice cubes.  Shake vigorously for 30 seconds.

Fill a Highball glass ¾’s with ice cubes (not crushed ice), sprig of fresh mint and sliver of fresh lime.  Pour contents over and top with Coca-Cola.  Garnish with fresh lime.  This recipe will make 2-3 Iced Teas. Enjoy!

A big kiss and a hug along with some words that say I love you and appreciate everything you do for me!

As Sales Manager Chris Longley so eloquently puts it, it’s the simple things in life that means the most.

Happy Mother’s Day! 

Forever buzzing with excitement, Southbank has been in a state of constant reinvention since its 90s redevelopment, and with the latest Hamer Hall renovations, there is much that this suburb has to offer.

Home to Melbourne’s official arts precinct, Southbank’s event schedule is unrivalled. With some of the nation’s finest galleries, museums and theatres all hosting internationally recognised exhibitions and productions, a visit to Southbank is certain to whet your cultural appetite.

As one of our city’s busiest tourist destinations, Southbank turns on the hospitality charm in the form of glitzy restaurants and bars, glamorous hotels and high-end retail stores. And whether it’s the fast paced, day-to-day trade of the business crowd, excited tourists or an enthusiastic arts crowd, you can be sure that this suburb will always provide for its vast audience.

As construction at Habitat Southbank is nearing completion, why not head into Southbank this weekend to view one of the apartments (and their spectacular views) and whilst you are at it, explore the area for yourself!

In saying so, we’ve picked out some activities that are perfect to fill the empty spaces in your calendar.

9am breakfast at My Mexican Cousin
10.30am guided exhibition tour of the NGV
Noon Shopping at NGV Bookshop
12:30: Private inspection at Habitat Apartments, Southbank
1.30pm lunch at Trocadero
3:30pm – Gondola Cruise down the Yarra
6pm dinner at Rockpool
9pm drinks at South Wharf’s Boatbuilders Yard

Designed by eminent Melbourne architectural firm, award-winning Bruce Henderson Architects, and gracefully nestled in tranquil, leafy surrounds, these 16 superbly designed terraces invites you to experience the casual sophistication of a chic, contemporary blend of timber, glass and earthy finishes.

Enjoy airy open-plan living filled with the warm ambience of natural light. Featuring engineered timber flooring, split cycle air conditioning and immaculately finished; Beach House’s superb quality shows in a wealth of brilliantly composed details. From wool carpet, to subtle arrangement of downlights, mirrored sliding robes and a selection of superior natural materials, Beach House interiors demonstrate a meticulous design approach that focuses on a total living experience.

The kitchen is designed with ample proportions and luxury features. Quality stainless steel fittings and European appliances ensure durability and reliable performance. Stone benchtops, toughened mirror glass splashbacks and high gloss finishes combine to keep a carefully considered design looking great long into the future.

Discover an exceptional outdoor lifestyle with all the convenience and charm of a vibrant seaside community. Imagine a daily walk, invigorating run or coming home to the bliss of a quick dip after work at one of the city’s best beaches. Visit some of the best cafes and restaurants in the area (our top 5 picks are listed here). This is open-air living at its finest.

Beach House Terraces is located at 56 Abbott St, Sandringham. For more information about the project, please contact us at 1300 850 730.

With a rich tapestry of fashion, retail and manufacturing heritage that dates back to the mid 1800’s, Collingwood has established itself as one of Melbourne’s cultural inner city precincts. Today its alluring charm, café culture, luxury homewares and boutique fashion stores can be seen by strolling down the leafy streets surrounding Oxley including Cambridge Street, Oxford Street, Smith Street, Gertrude Street and Victoria Parade. You’ll soon discover why Melbournians who know their fashion, food, wine and art flock to Collingwood. Bordered by the Carlton Gardens, Fitzroy Gardens, Treasury Gardens, East Melbourne, Richmond and Clifton Hill – Collingwood is one of Melbourne’s blue chip (intrinsic Northern quarter) suburbs, where many aspire to reside.

A shopper’s paradise

When it comes to fashion, individual style is highly encouraged. Local boutiques including Alpha60, Assin and Et Al are widely known for showcasing a variety of unique looks for all seasons. Bargain hunters also love Collingwood for its range of factory outlets and op shops.

Collingwood is also a premium emporium for rare designer luxury homewares and vintage furniture. You will be spoilt for choice with shops such as Duo Viva, CIBI and 84 Smith Street stocking Japanese, Moroccan, Scandinavian or Manhattan inspired pieces.

Image source: Timeout Melbourne

A foodie’s dreamland

There’s no shortage of cafes and restaurants in Collingwood. You can choose from popular cheap eats such as Huxtaburger and Proud Mary (which also happens to be just across the road from Oxley!) to proper fine dining restaurants like Moon Under Water. 

Broadsheet has a great list of Collingwood’s best cheap eats which can be viewed here. For a little bit different dining experience, try Friends of the Earth Food Co-op. The food co-op is an ethical trader of biodynamic products of fresh organic food grown by locals in the area that has been going on for more than 30 years. The co-op is run by the charity Friends of the Earth Melbourne and it’s one of the non-profit’s many vehicles for advocating social and environmental justice. For a small plate for $10 or large plate for $12.50, you get what the kitchen has prepared on the day so you can guarantee that the food is fresh and different every time you come and visit.

Image source: Weekend Notes

A bar hopper’s playground

Relax and unwind after a long day at one of Collingwood’s well known establishments. Our favourite would have to be Cavallero. Renowned for its no-fuss approach, Cavallero has you covered from coffee to cocktail. Cavallero also has a great wine list which labels lean towards Europe. With the kitchen pumping out decent snacks and meals, it seems like a good excuse to order more than one bottle.

If you’re after a slightly different kind of cocktail, head down to Teriyaki Anarchy Sake. Try drinks like the ‘Blood, Sweat and Tears’ (Campari and gin built over ice and topped with a slug of Pocari Sweat, an ominously named Japanese soft drink), or the ‘Rainbow Highball’ (a thick-handled pot glass filled with fine Japanese whiskey and soda) and have ball.

Image source: Broadsheet

An art enthusiast’s heaven

Collingwood has long led the way when it comes to supporting artist initiatives and small galleries. Make sure you visit some of the best galleries in the area, including Lamington Drive, Fehily Contemporary, 69 Street and The Compound Interest. Serious art aficionados must also visit Australian Galleries, Ochre and Catherine Asquith Gallery. If you’re lucky, you can also catch a performance or exhibition at Collingwood Underground Theatre, set in an abandoned underground carpark. The site is also known to host events such as the Fringe Festival.

Collingwood is also home to an extensive “collection” of street art. While most of us are oblivious to the beauty of street art, Kevin Anslow -a Melbourne local, took the chance and recorded it all on his website, Melbourne Street Art 86. Much of the street art in Collingwood is located in the lanes and alleyways leading off Smith Street.  However, there are also a few pieces in the main street itself and other locations around Smith Street. Download the walking guide and enjoy the beauty and diversity of Collingwood’s street art.

Image source: Melbourne Street Art 86

To register for more information and to view the Oxley display suite, click here or call us on 1300 850 730

1. MAKE SURE THE DEVELOPER HAS A GOOD REPUTATION

Research the background of the developer and its track record. Have there been court actions against the developer? Does it have a history of delivering what has been promised and settling disputes quickly and neatly?

“Banks are strict on who they lend to. Banks also look for a good track record before handing over construction finance,” says Tim Rees, director of CBRE residential projects.

The internet is a good tool for research, and look for blogs and newspaper articles. Do not judge a developer solely by its website, and ensure there is an office where you can meet people face to face.

It is also a good idea to visit the property site and check the location. You may find other construction in the area, which may affect your view. You should also carefully inspect the display home, models and plans as well as the fixtures and fittings.

2. WEIGH UP LEVERAGED INVESTMENTS CAREFULLY

In times past many savvy investors would buy apartments off the plan, leaving only a deposit of 10%, and sell them on before settlement to make a tidy profit. It made many people rich. When the GFC hit these leveraged investments also made many people broke. Some speculators are tied up in court with developers chasing their money on units that have dropped in value to much less than the investor agreed to pay. This investment strategy is only for those who are willing to take big risks witha deep understanding of residential investment.

“You don’t see this sort of speculation now, and as a result it is a much more stable and realistic market,” says Rees.

Leveraging is simply using other people’s money, either as a mortgage from a lender or sometimes from the developer, to increase the potential gain from a property investment over a fixed period of time. What separates leveraged investment from long-term investment is that it must have an end date that can be calculated. It is the opposite of taking a mortgage out to buy your house, paying it off over 25 years and owning the property.

For example, if you buy off the plan and put a $10,000 deposit on a $100,000 property, you would need to borrow $90,000. If the $90,000 borrowed costs you 5% in interest, it would add $4,500 to the entire cost, therefore the $100,000 investment is in fact $104,500, if you sell within that one year period. To make a profit, the property must be sold for more than $104,500. If the property sells for $110,000 you have made of profit of $5,500.

The profit is impressive when calculated as a percentage gain on the capital, however take note: if the property sells for $102,000 it will cost you money rather than making it.

3. CAPITALISE ON STAMP DUTY CONCESSIONS ON OFFER

Buying apartments and townhouses off the plan often attracts exemptions or reduced stamp duty for property purchases in states across Australia.Each Australian state and territory has its own concessions and incentives, but if you are a first-home buyer chances are you are eligible for some sort of stamp duty discount or waiver.

The schemes mostly provide assistance for individuals buying their first homes, but seniors wishing to downsize might be eligible in some places as well.

From time to time, schemes have been unveiled for upgrading buyers aimed at stimulating the construction of new homes. Some schemes have required purchasing off the plan before construction commences, and others subsidise part of the stamp duty after construction commences. The schemes typically have eligibility requirements regarding the top price that precludes consideration.

Some governments require stamp duty payments after exchange documents are signed, but others delay the payment of stamp duty until the registration of the strata plan. A useful website for reference is stampdutycalculator.com.au, which calculates the amount of stamp duty payable on a state-by-state basis depending on whether you are an owner-occupier, investor or first home buyer. Also check state government websites for the latest information in your area.

4.TAKE RENTAL GUARANTEES WITH A GRAIN OF SALT

It is a good idea to treat rental guarantees with suspicion and do the numbers several times to be sure they really stack up.

Buyers’ agent Catherine Cashmore warns against buying into a development that is offering a rental guarantee because “it is always factored into the sales price, and once the guarantee expires, the unit’s yield will revert back to market forces”.

Cashmore says current rental guarantees are in the order of 5% to 7%. If an investment has a gross return of 6% and the developer guarantees $300 a week rent that would put the purchase price at $260,000.

But if the market rent is in fact $250 a week, the property is really worth $218,000. This would have you paying 19.2% over the market value. The developer only has to pay $5,200 in total over two years to guarantee the $300 a week rent and the company would pocket $42,000 – or $36,800 net – on the sale price.

5. TAKE INTO CONSIDERATION RISING AND FALLING VALUES

All purchasers must define their own needs. Owner-occupiers are different to investors and want very different things from property. Investors who purchase off the plan should be buying for the medium to long term.

“Buying short term is risky in the current environment. Look to hold a property for five to 10 years, and that will allow you to ride out any negative movements in the market that could reflect in the value of the property. If you stick with the long term you will end up with solid capital growth,” says Rees.

Investors, who accounted for about 70% of sales six years ago, once dominated buying off the plan. But the tide is turning.

Rees said that owner-occupiers have become shrewd in buying property off the plan in recent years, and that purchases off the plan have become popular.

The tight residential market in Sydney, where owner-occupiers have seemingly embraced buying off the plan or face never getting started on the property ladder, has driven this, Rees says.

“In Sydney, there are not many apartment buildings these days that are not already sold when they are finished, so they do not add anything to the available housing stock.

“This keeps the market competitive and tight, and owners-occupiers understand that buying off the plan is a reputable way to buy and no longer the domain of investors,” Rees says.

However, do not always assume that property prices are going to rise. There have also been cases of people paying far more for a property at settlement than they could hope to sell it for in the current market.

When you are considering what might happen to property prices from the time you sign the contract to settlement, you should also research what other projects will be completed over this time frame in the same area.

There could, for example, be a glut of apartments being marketed off the plan our due to commence construction, which could create an oversupply rental situation or reduce values.

6. CONSIDER CUSTOMISATION

Not only can buyers select what they want upfront, they can sometimes make some changes to the floor plans so the property better suits their needs. Almost always the first units to be sold are those in the best positions, such as corners or penthouses. Some ground-floor apartments have courtyards, too. It is first in, best dressed. Investors can be found looking for these units, since they usually bring in a greater rent.

Some buyers may pick up two apartments and amalgamate them into a large three-bedroom apartment, while others may turn a two-bedroom unit into a large one-bedroom apartment. Most developers can offer buyers choices of finishes and a variety of upgrades for additional costs.

A serious chef might want the dream kitchen with the best appliances and stone benchtops, while an asthmatic would probably opt for a timber or stone floor rather than carpet.

Bear in mind, though, that changes to the plan and to fittings and finishes might push up the price, but might not have as great an impact on end value. Also, if it is an investment purchase, consider who is likely to rent it and whether they would pay more for high-quality extras.

7. DO YOUR DUE DILIGENCE

Nothing can be more important than ensuring that the correct research and checks have been conducted and that you are going into the purchase with your eyes wide open. First, it is absolutely essential to understand the buying process, precisely what funds are required and when you will need them. This will allow you to make an accurate cashflow analysis. It should cover investment and risk.

High potential returns often equal greater risk, and vice versa. Take the time to identify the potential risk, and the returns that you have calculated should be acceptably balanced. It is important to settle for a purchase that suits your financial situation and investment targets.

“Be vigilant with money, and have your finance lined up when you put down the deposit. Don’t be caught out at settlement by not having finance ready. Something as simple as changing jobs and entering into a probation period can affect your capacity to get finance,” says Carolyn Chudleigh, partner of law firm Holding Redlich.

If you are planning to buy off the plan interstate, familiarise yourself with the laws and taxes of that state. And if you have a friend or relative in that location ask him or her to go and physically see the site since there could be any number of factories or other developments nearby that could impact your decision.

8. DON’T UNDERESTIMATE THE RISKS

One of the biggest risks is that a developer or builder will go under before completion or that a project will fail to get off the ground, but this should result in no financial loss for the buyer. When you pay your 10% deposit to secure your property it is held in trust either by the selling agent or vendor’s solicitor. If the developer is unable to go ahead for whatever reason buyers will get their money back.

Another big issue is often the final product. Chudleigh says the best way to protect yourself from a nasty shock is to check every detail on the sale contract, particularly regarding the finishes. “Most disputes arise from a buyer not being happy with the end product. The best way to avoid this is to be aware of exactly what all of the finishes should be,” she says.

“You should look at the schedule of finishes for all parts of the property, including floor coverings, colour schemes and kitchen appliances. Know everything about the interior, down to how many power points there will be in every room. All of this can be negotiated before exchange of contracts and should be included specifically in the contract if you want to be able to enforce performance against the vendor. If a contract is skinny on detail, there may be little room for complain at the end of the day,” she says.

Timing of delivery can also be an issue for buyers of property off the plan. “Developers do need flexibility in the sale contract so they can ensure successful delivery of the apartments, and there are many situations that may cause the delivery date to be extended, such as wet weather.

“Become familiar with what is on the contract that will allow the ‘sunset’ completion date to be moved. Leave no room for surprises. If you do not understand the contract, take it to a conveyancer and have them read it and explain it to you. Do not cut costs, because with buying off the plan you cannot see exactly what you are signing up for,” Chudleigh says.

Purchasers have successfully been awarded large sums of money through the courts where their views have been built out contrary to assurances from marketing agents, so there is recourse.

In Victoria, a new consumer law aimed at improving transparency and disclosure for off the plan property came into force early 2012. The front page of all sales contracts must state three things: that the amount of a deposit is negotiable but cannot exceed 10% of the purchase price; a “substantial period of time” may pass between signing the contract of sale and when the buyer becomes the registered owner of the property; and the value of the property may change between the time the contract is signed and when the buyer takes ownership.

These detailed and clear warnings on the contract highlight the risks that are taken when buying off the plan.

When it comes to signing the contract you should be completely satisfied with all terms. If you are not satisfied by certain clauses, you should ask to have them amended, though the developer may refuse. The bottom line is that if you are not happy with the contract, you should seek legal advice. If the developer adopts a “take it or leave it” approach, your best bet may be to leave it.

9. CONSIDER BUYING OFF THE PLAN USING YOUR SELF-MANAGED SUPER FUND

Property investors can use limited recourse borrowing (LBRA) to fund off-the-plan investments using their self-managed super funds.

Under this strategy, your SMSF receives a concessionally taxed rent, pays off the loan while you are still working, and transfers the property to you upon retirement.

After your retirement, you can either:

• Take the property as a non-cash, lump-sum benefit (although capital gains tax is payable on any capital profit, the tax rate is an effective 10% – if the property was owned by the fund for at least 12 months); or
• Buy the property from the fund for its market price. No CGT is payable if the property is backing the payment of a superannuation pension, but you are personally liable for stamp duty.

Under limited recourse borrowing rules SMSFs require a separate lending arrangement for each “single asset”.

In May last year, the ATO clarified what constitutes a single acquirable asset and provided a specific example of what constitutes a single asset in relation to a completed apartment:

“The trustees of an SMSF enter into a contract to purchase a strata-titled apartment off the plan. A deposit is required upon entering into the contract, with the balance to be paid upon settlement for the completed strata-titled apartment.

“A single LRBA can be entered into to fund both the deposit and the balance to be paid under the contract upon settlement. Both the deposit and the settlement payment are applied for the acquisition of a single acquirable asset being the completed strata-titled apartment.”

According to AMP financial planning, the ruling recognises that “generally speaking, under LBRA rules, the single acquirable asset is considered to be the completed strata-titled unit, or land with a completed house on it – despite the fact that the building activity is yet to occur”.

As a result, where a contract is entered into for a unit off the plan or a house and land package, both the initial deposit and the final payment upon settlement can now be funded by a LRBA. Previously, under the draft ruling, it had been suggested that the initial deposit for these types of transactions would need to have been made from existing SMSF assets.

Mortgage Choice broker Michelle Towner, who specialises in helping investors acquire apartments off the plan using SMSF borrowing rules, stresses the importance of these investments being structured correctly and that buyers must engage a qualified financial planner, lawyer or accountant to draft up the contracts.

She says the contract needs to be worded correctly so that when the asset is transferred from the bare trust to the super fund, the SMSF beneficiaries don’t risk having to pay double stamp duty.

The bare trust is the arm’s length holding trust that holds the property until the mortgage has been paid off.

In particular, any off the plan contract must be written to say the deposit is for the acquisition or deferred purchase of the property, not just an option or right to buy the property. Investors will need to work with a professional to ensure the borrowing arrangements are worded and structured correctly.

10. BUYING EARLY CAN HAVE ITS ADVANTAGES

Not only can you often get first pick if you get in early, but there can be sound reasons for buying property off the plan. Before a property is constructed developers look for presales to give to the bank so it will provide funding for construction.

The GFC has made it hard for developers to get construction finance, and many banks are not willing to part with money unless the majority of the proposed development has been sold. Many developers are willing to give good deals upfront to secure sales. Discounts can start from about 5% to about 10% on the completion price and usually the earlier you are in, the better price you can negotiate.

However, you should not rush in to secure an early purchase simply to get a discount until you are satisfied with your investment and the contract you are about to sign.

11. DON’T MISS OUT ON TAX BENEFITS FOR INVESTORS

As with all investment property, there are some significant tax benefits when you buy an investment property off the plan. These benefits are greater when property is newer because more tax depreciation items are available.

Those benefits are best when the property is new, so buying off the plan can maximise your available tax deductions. Be sure to have a schedule of inclusions such as fittings and fixtures on the sale contract, and commission a depreciation schedule from a reputable provider. As an off the plan buyer you may qualify for a 50% CGT discount.

The ATO requires that a period of 12 months elapses before the buyer is eligible, but this period begins when the contract has been signed, so provided your settlement period is 12 months or longer (as it will be in most cases) you could in theory sell your recently purchased property the day after settlement and still qualify for the generous tax concession.

The catch is that the CGT discount only applies if you are forced to sell the property due to changes in circumstances. If you bought the property with the intention of selling it at a profit as soon as it is completed, it does not qualify as an investment but as part of a profit-making scheme, so normal income tax would apply.

Ken Raiss, partner at Chan & Naylor Accountants, points out that if you buy with the intention to sell the sale would still be taxed at marginal tax rates even if you keep it for much longer than 12 months.

If you originally intended to keep the property but decide to sell due to unforeseen it is still considered a capital gain but is not subject to the 50% CGT discount. This means you will still be taxed at your marginal tax rate. This could be advantageous if you have capital losses.

12. CONSIDER USING A DEPOSIT BOND RATHER THAN TYING UP YOUR CASH

Buying off the plan will require investor pay a deposit, usually 10% of the purchase price. While developers prefer cash, some will allow buyers to use a deposit bond or bank guarantee instead of requiring cash deposit.

A deposit bond is a guarantee that says the insurance provider will pay 10% deposit to the vendor in any of the circumstances where the deposit would ordinarily be forfeited by the vendor. If the settlement does not occur and the deposit forfeited, the deposit bond provider will seek to recover the money from the borrower. There is no exchange of money in with the deposit bond in place until settlement. At settlement the buyer pays the purchase price in full, and the deposit bond lapses.

The main benefit of using a deposit bond is that savings remain intact, as the cost of the deposit bond is far less than the deposit itself.

The most well-known provider of deposit bonds is Deposit Power, which provides both short-term deposit bonds for settlements of up to six months and long-term deposit bonds for settlements from six months up to four years, tailored for those buying off the plan.

Another provider is Deposit Bonds Australia, which issues deposit guarantees on behalf of QBE insurances. It requires no mortgage documentation, but applicants must prove their ability to fund 105% of the purchase price, not just pay 10% deposit.

The bond is provided in exchange for a one-off fee. According to Michelle Towner, a $50,000 deposit bond for a property settling in three years’ time would require the borrower to pay a one-off fee around $3,600.

Deposit bonds providers will only provide a deposit bond guarantee to borrowers who satisfy a minimum net equity requirement and tangible worth requirement. First-home buyers (or first-time renter-investors) will be required to provide a guarantor.

Deposit Power requires loan approval, but Deposit Bond Australia does not require that borrowers obtain mortgage approval.

13. KEEP IN MIND NEGATIVE GEARING BENEFITS

Many off the plan investors will look to take advantage of negative gearing allowances to reduce their annual tax bills. Negative gearing allows investors to deduct losses made on their investment property against their personal taxable income.

Losses include costs such as interest on a home loan as well as maintenance and other expenses for an investment property. The most important thing to realise about negative gearing is that it is fundamentally offsetting a loss.

Although investors can claim that loss on their tax returns at the end of the year, an investor must carry the cost of that loss throughout the year.

Ultimately, when investing, most purchasers would be hoping that rental rates increase over time and result in the asset moving from loss-making to income-producing.

While most of the negative gearing benefits will come post-settlement when the apartment is rented out and the mortgage is being paid off, investors can also claim the interest or costs associated with funding their 10% deposit from the date they sign the contract.

Ken Raiss says interest paid on deposit funds is tax deductible, as are the costs associated with a deposit bond, if you choose to use one, from the date of exchange. Borrowing expenses are amortised over five years.

14. BE AWARE THAT YOU CANNOT EASILY GET OUT OF A CONTRACT

A contract to purchase an apartment off the plan is a legally binding document.

Generally, if you don’t proceed with the contract you will lose your deposit and may be pursued by the developer for the balance of payment or for any shortfall should the property be resold at a lower price.

Changes in personal circumstances such as divorce, unemployment, illness or death of a partner are not grounds for legally cancelling an off the plan contract.

You can generally only cancel a contract if the terms and conditions have not been met by the developer or builder.

These may include conditions set out in a “sunset clause”, which usually pertains to a period of time in which the project must be completed and settlement should occur. You may also be able to cancel a contract if the builder has not registered the plans for the development by a set date in the contract.

Buyers’ agent Catherine Cashmore says off the plan contracts are “incredibly onerous to the purchaser” and urges buyers to ensure they have contracts explained to them by a qualified solicitor.

Here are some of our recommendations in the area, all within minutes from Insignia, our new apartment project in Ivanhoe:

Upper and Lower Heidelberg Road Shopping Village

Considered to be the suburb’s centre of activity, Heidelberg Road hosts a strip of retail stores and restaurants.  The timeless village charm meets contemporary shopping and lifestyle makes this busy hub a favourite among locals and visitors. The fact that most shops are owner operated offers shoppers a unique shopping experience as the emphasis is on customer service.  Local shop owners believe that when people go shopping it’s more than just picking groceries or the daily newspaper.

 “It’s about connecting with our customers and knowing that when you walk through our doors, you will feel like you are part of the same community as the people that work here, whether you are an Ivanhoe local or just passing through.” 
- Ivanhoe Traders Association

Upper Heidelberg Road is the primary shopping strip where the restaurants, shops and conveniences are clustered. Lower Heidelberg Road is a quainter version. Popular shops include So Swish, a locally renowned gift shop and Andrew’s Books.

Source: Wikipedia, www.shopinivanhoe.com.au, http://www.banyule.vic.gov.au

Va Tutto
226 Heidelberg Road, Ivanhoe
T – (03) 9499 7769

Voted Best Restaurant in 2006 by Herald Sun, Va Tutto is a swish but affordable modern Italian with options to satisfy every taste. Va Tutto offers carefully constructed modern Italian cuisine, fused with Asian flavours and techniques, creates a menu of exciting and varied dishes.

There are two dining areas at Va Tutto – the restaurant and the bistro.  The restaurant is a white table clothed area suited for special occasions whilst the bistro offers a cheaper and more relaxed atmosphere without the white table cloth.  Although the two areas offer a different ambiance, both are serviced by the same kitchen so wherever you choose to sit, you will still get the same quality of food and service. There is also a private room for special events or meetings.

Source: http://www.broadsheet.com.au/melbourne/food-and-drink/directory/restaurant/va-tutto, http://vatutto.com.au/

Barrio
77 Upper Heidelberg Road, Ivanhoe
T – (03) 9499 9907

Apart from its Spanish name, Barrio offers a more broadly Mediterranean menu located in the heritage-listed Ivanhoe fire station, with all its charm and character. Barrio is owned and run by Paul Rae and with acclaimed chef Henry Honner running the kitchen.The stylish, three-roomed space has a friendliness and warmth about it, with dark wood tables, comfortable chairs and modern artwork.

With a menu that ranges from chicken tagine to char grilled eye fillet, Barrio has quickly become a favourite among locals and visitors.

Source: www.au.timeout.com/melbourne/restaurants/venues/955/barrio, http://www.barriorestaurant.com.au/ 

Ivanhoe Maker’s Market
Banyule Art Space – Livingstone Community Centre, 11 Livingstone Street, Ivanhoe
T – (03) 9497 2014

Move away from the mass produced and get into some fair trade, handmade, funky must-haves. Held every third Saturday of the month, Ivanhoe Maker’s Market showcases unique handmade quality wares by talented ‘artisans and craftspeople’, many of which are from the local community. Each market showcases up to 30 stalls of fine textiles, ceramics, jewellery, mosaics, wood craft, cards, and more.

The market also features a “hands on” workshop, where visitors have the opportunity to work directly with selected artists. Some of the things visitors can learn include jewellery making and felting.

Source: http://www.visitmelbourne.com/regions/Melbourne/Events/Markets-and-vintage/Ivanhoe-Makers-Market.aspx, http://qualitymakersmarket.blogspot.com.au/, http://www.onlymelbourne.com.au/melbourne_details.php?id=19417 

By: Terence Rosenfield

I just listed a house for sale in Coburg and we’ve had a lot of enquiry about the area. Just north of Melbourne’s CBD, Coburg is a suburb well known for its cultural diversity. From the Middle Eastern shops in Sydney Road and the historic Pentridge prison (active until 1999) on Bell St, Coburg has it all. Here’s how what I would spend a day in this dynamic suburb. If you want to know more about Coburg, or the property for sale, please feel free to contact me on 0405 515 148.

8.00 AM

Start the day by walking or cycling along the Merri Creek Trail. Story goes that the area where the creek meets Yarra River was traditionally the location for large gatherings of the Wurundjeri people and is suspected to have been the location for one of the earliest land treaties in Australia between Indigenous Australians and European settlers.  While walking or cycling along Merri Creek you may be aware of the indigenous plantings, constructed wetlands and the animal life of the creek corridor.  The Merri valley contains many millions of years of history and secrets.

10.00 AM

Like many other suburbs in Melbourne, Coburg also has a thriving café scene. Locals and visitors mix together in many of Coburg’s establishments for a cuppa or brunch. One of the favourites in the area is Two Monks Café (350 Sydney Road, Coburg). With distinctive orange umbrellas, wide booth-style seating and friendly staff, Two Monks cafe offers a comfortable place to meet up with friends – and a decent chai latte. Try ‘The Coburger’ for a beef burger with chilli jam, or any of the foccaccias (weekdays only) named after local streets.

12.00 PM

When it comes to shopping, Coburg is definitely not short of options. Head down to Coburg Shopping Village, where the main commercial activity is between the Coburg Railway station and Sydney Road. The shopping strip comprises of 250 shops, a small indoor market, several supermarkets and discount stores surrounded by ground level car parks.

3.00 PM

Have an afternoon snack at Zaatar (365 Sydney Road, Coburg), owned by the sons of Chafic Choueiri, the man who started Brunswick’s renowned A1 Bakery. Their bread-based menus are the most popular, with 15 different types of pizza and pies to choose from. They even have a surprising east-meets-west offering: a vegemite and cheese pie –a must try for adventurous foodies.

6.00 PM

Enjoy the late afternoon sun at Coburg Lake Reserve. Watch the ducks and geese upon the lake, picnic, attend a festival, explore the cleverly themed playgrounds, stroll quietly among the tall trees or create a challenging workout for yourself. Set aside at least an hour to completely traverse the park and definitely try out the purpose built exercise equipment.

8.00 PM

There are plenty of things to do when the sun goes down in Coburg. There are lots of bars and music venues along Sydney Road for you to choose from. If you go up the street towards Bell Street, you will find heaps of shisha joints. Shisha is a syrupy tobacco mix with molasses and vegetable glycerol which is smoked in a hookah, usually popular among the younger crowd. Coburg is also home to the Coburg Drive-In Cinema (155 Newlands Rd, Coburg), perfect for those who are keen on a nostalgic cinema experience. Movies start at dusk across three screens and it tends to get busy during the weekends, so you should plan ahead to ensure you don’t miss out on tickets.

Images taken from google.com, facebook.com/twomonkscafe, broadsheet.com.au, nixpages.blogpost.com.au, 

I have been a Mortgage Broker for a number of year now. At the start of every year, the same question is always asked of me by new clients – “We are planning to buy a property this year and need advice??”
 
It is amazing how often the conversation goes the same way!
 
How much deposit do you have?
Well not much but we are going to save and should have the deposit by the middle of the year
 
How much do you plan on saving each month?
Whatever we can
 
It is at this point I would normally take a deep breath before I continue.
 
If you don?t have a goal for your savings or even a plan to get there, what makes you think this year will be any different to any other year?
 
When you want to buy a property obviously the bigger your deposit the better it is for you as the amount you need to borrow is less.  As a guide the minimum amount you need to have a deposit is 10% of the purchase price.  Most lenders want you to show them that you have got 5% genuine savings. They want you to demonstrate that you have been able to manage your money and saved at least 5% of the purchase price, the balance could then be from other sources such as a gift from parents or maybe sale of an asset such as a car.

So how do you go about saving this deposit?
 
Set a Goal Amount
The first step is to know how much you need to save. If you are buying a property for $400,000 you will need at least 5% deposit, or $20,000 PLUS additional money for purchase costs including solicitor?s fees, and building and pest inspections.
 
Set A Savings Plan
Calculate how much you can save each month.  Remember, what you are trying to achieve, owning your own home, and decide how much you really want it.
 
What are you prepared to give up to save more money?  
 
Things to consider are things like restaurant meals, gym membership, holidays away, buying lunches when you can take leftovers from home, do you really need to smoke (???) and the list can go on and on.
 
Only you know what you can change in your lifestyle to save money. Remember, the goal is to own your own dream home.
 
If possible, have the amount you want to save deducted from your wages and have it paid into an account that you do not have access on a daily basis.  By having an account only to save for your home loan deposit you will have the “BUZZ” of seeing the balance grow and grow getting you closer to your goal.
 
Set a Timeframe
Commit to a date that you want to have the deposit saved and be in a good position to apply for a home loan.  
 
This date needs to be realistic. It is no use setting it for 4 months? time, if you do not have the income to achieve that savings goal in that time frame!
 
By setting dates, you will be more focused on reaching your savings goal and know there is an end date to some of the personal sacrifices you are making to save the deposit.
 
Next Step
Once you have saved the deposit, you will then be in a great position look at your home loan options and discuss your personal circumstances to make sure you have a home loan that fits in with your circumstances, now and into the future.
 
Remember, using the services of an experienced Mortgage Adviser will help ensure you achieve your financial goals and the great Aussie tradition of owning your own property!