How To Buy Off-Plan Property: Seven Useful Tips
Purchasing property off-the-plan is becoming increasingly popular among first-time buyers since it is a cost-effective method to join the market. Simply put, buying off-the-plan refers to purchasing a house that has not yet been constructed. This can have significant advantages for first-time buyers and investors, but like with any major financial choice, it’s important to do your homework first to ensure you know what you’re getting into.
In this article, we’re going to give you some tips and what you should consider before committing your funds to a house off-plan.
Seven Tips for Buying Off-Plan Property
Become Familiar With the Market
It’s always a good idea to keep an eye on the market and do your homework on the neighborhoods you’re interested in, whether you’re purchasing your first home or investment property. Check if any future projects in the neighborhood could affect your purchase. If you plan to rent it out in the future, also check the current rates and average rental yields
Consider the Future
When buying a home, consider how it will sell in the future and how it will appeal to potential purchasers. Is the location in a developing neighborhood? Are there any anticipated infrastructure plans in the area that will raise the price of the property? Selling a one-bedroom flat in a family-oriented neighborhood may be difficult. Similarly, selling a family house on a busy street with a lot of nightlife could be tough.
Do Some Research About the Developer
It’s a good idea to do some research on your building developer to make sure they’re not only trustworthy but also have a track record of delivering projects on time. You can make a more informed judgment by researching their past performance and visiting completed projects they’ve worked on.
Examine the Specifications
Your off-the-plan purchase is made based on specifications, unlike an established property where you can physically view and walk about the place you’re buying. For a variety of reasons, this can be both good and negative. The disadvantage is that you are committing to a home you have not had the opportunity to view, and you may not receive the apartment you expected. To avoid being surprised when the project is completed, carefully review all of the specifications mentioned in your contract and ask plenty of questions.
Get Legal Help
When buying a house, it’s usually a good idea to hire a conveyancer or solicitor to handle all of the paperwork you’ll need to sign before closing. Because buying off-the-plan differs from buying a pre-existing property, you need to seek legal advice to analyze your contract independently and ensure you understand all the tiny print and provisions that may not always be in your favor. There are costs involved, but they are insignificant compared to the costs of dealing with legal fights later.
Arrange Your Finances
Getting pre-approval for a loan before signing any contracts is a good idea. Note that banks may grant conditional clearance for off-the-plan purchases, but they will not advance your money until the property has been built and a valuation has been completed. A mortgage offer is usually only valid for six months after it is made. Some lenders will then extend it for a short time. However, you may find yourself needing to start over with your application. Because you’ve exchanged contracts, you’re most likely committed to the transaction at this point. Before you exchange contracts, see whether you can include a get-out clause.
Make Sure Everything Is Finished
Don’t feel obligated to move in before it is finished to your satisfaction. Most developers will not give you access to the property to conduct a report before closing, but this is something that should be challenged. Whether you want to evaluate the property yourself, bring a surveyor in to do a thorough inspection, or hire a snagging inspector, you’ll want to make sure it’s finished to a high quality.
Questions To Ask the Developer
When purchasing an off-the-plan property, there are a few things to consider. Before you sign anything, ask the developer a few questions.
- Will your deposit be still safe if any problems occur, such as bankruptcy?
- Is the property’s value subject to change after the exchange? This is important as it might affect your mortgage.
- Is it possible for you to see the planning permission?
- What are the estate management charges? Make sure you ask how much you’ll need to pay for shared spaces.
- What does the price include? Check to see if you’ll have to pay extra for anything
- When will you be able to view the property before it is completed? You’ll want to make sure the property is finished to a high quality before you complete and take ownership, whether you inspect it yourself, go on-site with a surveyor to check it out, or hire a surveyor.
- When will the development be finished? Getting crystal clear answers to this question is very important. Make sure the response you’re getting isn’t vague so you’ll know what you’re getting yourself into. Also, ask if any delays are expected.
- Are they providing a new-build warranty? If yes, how long is it valid for?
Benefits of Off-Plan Property
One of the key benefits of purchasing property off-plan is the ability to get a deal at a lower price. This is frequently because developers want to show a specific amount of sales before marketing the development or sell as many units as possible before completion. As an added incentive, some developers give further discounts to investors who purchase many properties at the same time.
Strong Capital Growth
Those who buy off-plan profit the most from rising house prices. If a property is purchased in 2020 but isn’t expected to be completed until 2022, you will see your property appreciate each year. This can greatly increase the value of a home, especially if it was purchased at a low price from the start.
Some off-plan agreements come with the option of making phased payments, depending on the developer and the home. These payments can help stretch the expense of purchase and allow you to buy a home without putting down a substantial down payment.
A Brand New Home
One of the most common reasons for purchasing a home off-plan is that you will be obtaining a brand new unit that has never been occupied. This allows you to lay it out and design it whatever you want after it’s finished. It also significantly decreases the wear and tear that a structure or unit experiences as it ages, which can lead to problems down the road.
Buying Off-Plan Property Abroad
Buying off-plan property abroad can be a terrific opportunity as there might be more alternatives than in your home country. However, note that some aspects become more important if you’re getting property in a country with which you’re not familiar.
- Getting legal help is vital. Every country has its own set of rules and regulations when it comes to planning. These will frequently differ from one place to the next. Unless you speak the native language fluently, you should seek legal advice in this country.
- If you’re buying a home in another country, you’ll have to make a big transfer at some point. If that’s the case, make sure you browse around for the greatest rate.
- Check what kind of protection is available for off-plan buyers. In some countries, the protection level is very high. However, in some countries, you’ll have nowhere to go if a problem occurs.
There you have it. Hope these tips will help you to make an informed decision. Is this going to be your first home? If so, make sure you check out our 25 Tips for First-Time Home Buyers article too. Good luck with your search!
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