What you need to know about buying off-plan
If you're in the market to buy property, have you considered looking at something that might not exist yet? Perhaps your perfect place has not yet been built, and buying off-plan could be the solution. It requires trust because you can't see the finished product, but it could also bring significant rewards. Let's look at the pros and cons.
Benefits of buying off-plan
- You get a brand-new property that has never been occupied.
- Most developers offer a selection of fixtures, finishes, and sometimes even paint colours. Depending on the development, you might also be able to tailor the layout to your taste.
- You don't pay transfer duty and VAT is included in the purchase price.
- If you're buying the property to rent out, you could be looking at higher rental yields as tenants usually love property that no-one has ever lived in.
- Buying off-plan in a sectional title scheme, you only start paying once your section, or sometimes the entire development, has been completed.
- Before taking transfer, you'll have an opportunity to inspect your unit closely, along with a representative of the developer.
- You are covered by the Consumer Protection Act, so you have a certain amount of legal recourse if things don't go to plan. However, you should not rely on this - see "Do your homework" below, and make sure you get what you pay for.
Take careThere are not many potential negatives associated with buying off-plan, but it's important to be aware of them nonetheless.
- There's an element of risk because you cannot see the finished product when you buy.
- You are dependent on the developer to deliver what they promised. You cannot control how closely the finished product matches the marketing material, so you could be disappointed if the final property isn't what you had in mind.
- If the dates of completion and transfer don't coincide, you could be liable for occupational rent (also known as occupation interest). This is often a bone of contention between buyers and developers, so read the fine print carefully.
Do your homeworkWhen buying off-plan, research into the developer is an essential piece of homework that you should do. These are some of the important things to look into:
- Find out how long they've been in business and check out the track record of the developer.
- Look at their previous developments and how well they were built.
- Download or get hold of former projects' marketing brochures and compare them to the finished properties.
- Try to contact past customers to find out about their experiences of dealing with the developer. You could also look online for reviews or mentions on social media.
- Once construction starts, visit the site when you're able to, to see how work is progressing.
Easier to obtain finance
If a development has already been approved by one or more of the big banks, it could be easier to obtain finance when buying off-plan. And, remember that if you get a pre-approval certificate, showing how much you qualify for in terms of home loan, you'll be in an even stronger position to get the place you have your eye on. Let BetterBond assist you in sealing the deal. We're here to help you get a free pre-approval certificate .Watch video