Turnkey vs. Progress Payment: What Every New Build Investor Needs to Know

New Build investors have lots of options on the market, and there are different payment plans. So, which is better for you?

For many investors used to the traditional model of buying existing homes, purchasing off-the-plan can feel like uncharted territory. But in the current tax landscape, it’s quickly becoming the smarter, and often cheaper, move.

But before diving in, it’s crucial to understand the two different contract types you’ll encounter when buying off-the-plan. You can find the payment plan in your Sales & Purchase Agreement:

1. Progress Payment Contracts

Progress payment contracts are more common in house-and-land packages and involve staged payments throughout the build process. Here's how it typically works:

Example Scenario:

• Purchase Price: $550,000

  
  

• Land Value: $175,000
  

• Deposit (10%): $55,000 (of which $17,500 goes toward land, $37,500 toward the build)
  

• Residual Land Payment: $157,500 due five working days after land title is issued
  

• Build Progress Payments:

  • 15% when the foundation is poured

  • 35% when the roof goes on

  • 30% when GIB is fixed

  • Final balance within 5 days of CCC (Code Compliance Certificate)
    

The Catch? As the purchaser, you carry the interest cost throughout the build. This can add up, especially if delays occur.

The Upside? Because the developer doesn’t carry the financing burden, progress payment builds are typically cheaper than turnkey ones.

2. Turnkey Contracts

Turnkey contracts are much simpler and far more common for off-the-plan townhouses and apartments. This is generally the preferred option for new build investors.

How It Works:

• You go unconditional and pay a 10% deposit into the vendor’s solicitor’s trust account.
  

• No further payments are required until settlement, which could be 6–18 months away.
  

• At settlement, you pay the remaining 90%, typically made up of an additional 10% deposit and an 80% mortgage.
  

Why New Build Investors Prefer Turnkey:

• No interim payments
  

• Easier to budget
  

• Lower interest costs during the build
  

• Often easier to get lending approved – a huge advantage in today's tight credit environment

  
  

Turnkey vs. Progress Payment - Which is Better?

Feature	Turnkey	Progress Payment
Simplicity	✅ Easier	❌ More Complex
Upfront Costs	✅ 10% deposit only	❌ Multiple staged payments
Ongoing Costs	✅ Nothing until completion	❌ Pay throughout the build
Lending	✅ Easier to finance	❌ More difficult
Price	❌ Typically more expensive	✅ Usually cheaper

Thanks to tax reforms introduced by the Labour government, existing properties are now roughly 40% more expensive to own compared to new builds.

That’s led to a major shift: investors are increasingly targeting off-the-plan properties to capitalise on tax exemptions and lower deposit requirements.

Turnkey properties are generally much simpler to manage because the payment structure is linear and well-defined

Final Thoughts

Buying off-the-plan offers serious benefits in today’s market for new build investors — from tax advantages to lower deposit requirements — but only if you choose the right contract structure for your financial situation and risk tolerance.

Turnkey is generally the go-to for simplicity and financing. Progress payment can save money - but only if you're comfortable with cash flow and construction risk.

As always, work closely with your mortgage broker and advisor to assess your options - the structure you choose today can significantly affect your long-term return.

Our partners at The Finance Factory can help you navigate the lending requirements for your next investment property.

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