Supporting Clients Through Off-the-Plan Purchases

Off-the-plan purchases remain a feature of the New Zealand property market, particularly in the apartment and townhouse segment where developers bring larger projects to market before construction is complete. For buyers, the appeal is often a lower entry price and the ability to secure a property in a competitive market. For brokers, these transactions require a different approach to finance than a standard purchase - and a longer game in terms of client management.

Why Standard Pre-Approvals Do Not Cover the Full Period

A standard mortgage pre-approval in New Zealand is typically valid for three to six months. Off-the-plan settlements can be twelve, eighteen, or even twenty-four months away. That gap creates a real risk: the client's financial circumstances, the lender's policies, or the regulatory environment could all change materially before settlement arrives. Clients need to understand this from the outset, not discover it six weeks before they need to settle.

The most useful thing a broker can do early in the process is set expectations clearly. A pre-approval obtained today provides comfort that the client is likely to qualify under current conditions, but it is not a guarantee of lending at the time of settlement. Changes in income, employment status, additional debt, or shifts in LVR policy driven by RBNZ decisions could all affect the outcome. Regular check-ins with the client throughout the build period help surface any changes in circumstances early.

Valuation Risk at Settlement

One of the less-discussed risks in off-the-plan purchases is the valuation conducted at settlement rather than at the time of contract signing. If market values have moved since the client signed - particularly if they have fallen - the lender's valuation may come in below the purchase price. In that scenario, the client may need to contribute additional funds to cover the shortfall, or find a lender willing to lend against the lower valuation.

Brokers working with off-the-plan clients should discuss this scenario early and honestly. Clients who have budgeted their contribution precisely to the contract price can find themselves in difficulty if the valuation comes in lower. Encouraging clients to maintain some financial buffer - rather than committing every available dollar to the deposit - is prudent advice that can prevent a stressful situation at settlement.

Developer Due Diligence

While the legal and financial due diligence on the developer is primarily the domain of the client's solicitor, brokers can add value by flagging areas worth investigating. Developments that are well-progressed, backed by experienced developers, and have unconditional resource consent are generally lower risk than projects at early stages with less established teams. Some lenders also apply specific policies to off-the-plan lending that depend on the developer's track record or the stage of the project.

It is also worth understanding whether the development qualifies for any first home buyer incentives. Under certain conditions, newly built properties have historically attracted different LVR treatment or government support through schemes like the First Home Grant. The eligibility criteria for these programmes change over time, so checking current rules with each application rather than relying on older knowledge is important.

Managing the Pre-Settlement Period

As settlement approaches, the broker's role becomes more active again. Confirming that the client's financial position is unchanged, initiating a formal application with the lender in good time, and coordinating the valuation are all tasks that require planning. Developers typically provide notice of a settlement date several weeks in advance, but the timeline can shift, and lenders need adequate time to process applications. Building a settlement checklist and establishing a clear communication rhythm with the client in the final months avoids last-minute stress.

At Chaperone, we support brokers in tracking client milestones across longer transaction cycles, which is particularly useful for off-the-plan portfolios. Clients who feel well-supported throughout a long process are far more likely to refer their broker to others - and off-the-plan purchasers often move in social circles where property investment is a frequent topic of conversation. Doing this work well has compounding value.