Buying Off-Plan – Advantages and Considerations
In a growing market buying a property not yet constructed is sometimes a great option and often the only option. It can take a leap of faith but with the correct guidance and checks, you should feel comforted that you are going to enjoy watching the property being built and ending up with a place you personally chose.
Buying off-plan can basically be a plot of land with nothing else to show apart from plans and architect’s images. It could be an apartment on a complex or a stand-alone villa. Either way, you will need to be convinced that the developer/builder can be trusted and that the due diligence is thorough. Both on the proposed property (construction licences) and the developer (background, financial strength, track record). Once you are satisfied with these aspects then the fun can begin as you pick an apartment (ground, first, second floor or penthouse) or start choosing the finishing of the villa. Many developers are not always keen to make too many alterations if they have an approved project. We recommend making changes only if you feel you must.
Considerations - What Should You Think About?
This question is more appropriate to apartments. Check the orientation – do you want morning sun or evening sun? Is one apartment better value than the others? Do the end apartments benefit from an extra window /side view? Balcony space v inside space – often some apartments have more outside area – is this what you want? Which floor do you prefer? It is normal for the prices to rise each level with the ground floor apartments better value – if you are looking for an investment and rental income, the ground floor apartments can often be the best. Bedroom sizes – remember you are just looking at plans – a double bedroom with a built-in wardrobe and bedside cabinets should be at least 12m2. Any less and it can be cramped. Most off-plan projects will have a specification list. Check for which kitchen appliances are bring planned. It should be at least Siemens and Bosch standard. If the complex comes with a restaurant or extra facilities, make sure these will also be completed at the same time.
If you are happy and excited, and your lawyers have given you a green light, then it’s time to pay for it. There is usually a reservation fee to get the ball rolling and then stage payments.
With a villa it can be stage payments throughout so you have almost paid for it by the time it is completed. Agree for the work to be done in stages and that you will pay a corresponding amount. These stages can be – upon foundations in place – roof completed – waterproofing done etc. Once done the developer will inform you and you can then check the progress personally. You can instruct a surveyor to help you with this if you prefer. You would be recommended to leave 20/30% at the end that would only be paid once the habitation licence has been obtained and you would pay this at the deed/completion.
With apartments it is often not so demanding on your money and this is another reason why it is potentially attractive. Less deposit and more time to save or use your money elsewhere. By investing 30/40% and nothing else you are effectively only investing less than half of the price but in a rising market you could gain a super return on that money if the prices increase before completion. We can explain this to you in more detail if you wish. Most developers will ask for 30% upfront and maybe a smaller payment after 6 months. Typical build time for apartments are 24 months.
For more information on buying off-plan please feel free to contact us at OliveHomes.com. Remember, buying off-plan is not for everyone. While it can offer great gains and optimum choice there is also an underlying risk, so always seek good advice before proceeding.