Buying Off-Plan Properties: What You Need To Know
When you are scouting for a property to buy, you will definitely come across properties being sold off-plan. If you are not familiar with this term, you might be wondering what it is and how it works. Off-plan property buying has gained popularity in recent years and many investors and homeowners see it as a good way to buy a brand new property.
So, what does it mean to buy off-plan?
Off-plan buying basically means buying a property from a developer that hasn’t been built yet or is still under construction. As the name suggests, you are buying off the plan. That is, your decision to buy is based on the building designs and plans rather than the completed building. There are many reasons for buying a property off-plan and we will go through them one after the other in this article.
Benefits Of Buying Off-Plan Properties
1. Cost Saving
If a property is being sold off-plan and you get in early enough, that is before construction begins, you may be offered a discounted price. This is not the case for a completed property when so much work has already gone into the development of the property. When you purchase off the plan, you will have to pay an initial deposit, the balance of which is paid when construction is finished. This gives you the opportunity to save more money from the point of contract signing until settlement, helping you to reduce the amount you may need to borrow from the mortgage institutions if any.
2. Personalized Features
You might have the opportunity to make your own input to some features of the property if you buy it off-plan. As the property hasn’t been finished, you may have more flexibility than if you were buying a completed property. With this, you might want to check in with the developer to see what you can upgrade and enhance to match your preference so there are no hold-ups in the process later. Some of the personal touches you can add may include flooring, fixtures and fittings, sometimes furnishings and appliances.
3. Property Value Appreciation
Your property may rise in value between reservations and the time you move in. During the course of construction, there is the potential for capital growth. This means your property could end up benign worth more when you finally move in than when it was when you bought it.
4. Builder’s warranty
Most new properties generally come with a warranty, which will ensure your home is built to an agreed standard to give you the utmost satisfaction. Terms and conditions of the guarantee differ from developer to developer, so it’s in your right to check to see if a guarantee is available and how it protects you.
5. Brand New Home
When you buy off-plan properties, you are guaranteed 100% of a brand new home that no one has lived in before. It’s ready to live in when you move in and that’s it. There is hardly any maintenance required and no need to redecorate unless you want to.
Some Things To Consider When Buying Off-Plan Properties
1. Developer Trustworthiness
Off-Plan investment requires you to make payment throughout the construction process and the balance paid upon completion of the project. It is, therefore, necessary to take some time researching the developer to make sure they are trustworthy and have a good track record. You may want to find how long the firm has been in existence and the number of completed projects it has under its name. If possible, visit any of the developer’s completed projects and find out if they were happy with their properties, whether the developer was responsive to any issues raised during and after construction. A credible developer should be transparent and be willing to disclose all necessary details that will help you understand the project better. The developer should be willing to give regular updates on your property so you can see where every penny is going and the quality of work.
2. Project Viability
Investigate the project thoroughly and review their plans and timelines. If you are a buy-to-let investor, you might want to investigate the location and surrounding properties to ensure that your investment will pay off and appreciate in value. It can be hard to visualize exactly how your finished property will look like so it will be a good idea to visit the showroom at the site to get an idea of the unit and the kind of finish to expect.
3. Payment Options
The ideal payment option for an off-plan property will last up to the final completion of the property. Upon receipt of your contract, the developer will state the completion date when your new home will be ready. It should clearly indicate the initial deposit amount agreed upon and then detail the specific dates when subsequent payments are expected to be made up until completion.
4. Read Terms And Conditions
As usual, there will be contracts to sign and you might want to carefully read the terms and conditions in there to know what to expect. If you don’t understand anything in the contract, you can clarify with the developer. It is also a good idea to seek advice from a lawyer to understand the costs and risks before you sign the contract. Once you sign and exchange contracts, you are legally bound to follow any terms and conditions laid out in the contract
In summary, off-plan property buying has gained traction in recent years. Information is very key when buying off-plan. It is therefore very important to get as much information as possible to make your purchasing decision. Review the developer, project and management team and their capabilities, conduct your own due diligence, inspect the project and project plans to make an informed decision.