With the recent progress of the world and the country’s economic status, investing in properties and new home may not be so bad, especially if your income and savings now allow you the opportunity to actually consider it. At this point off-plan properties in the market are also becoming a trend as the demand rises while the supply of fully built properties is lagging a bit behind.
Ideally, buying a property off plan can be a wise move – either as an investment or as a new home you can have at a reasonably lower price.
But before you embark on such a commitment, there are things to consider, especially if you don’t want to end up losing all your hard-earned money on a bad off-plan deal. Things like your own financial capacity and imagining how the property will be like from the blueprint are just a couple of things you need to heed.
When investing in an off-plan property, you agree to buy from a developer before the foundations of the building is laid on the ground. You only get to see the plans, blueprints, and the brochures of how the project is foreseen. This is entirely different from buying something that is already built. Of course, the best thing about off-plan properties is that you get to enjoy a new build along with some advantages.
However, reports have it that off-plan property investing has posed some risks and thrown several issues on the buyers.
There were reported incidents of developers going bust before the project is completed - which means a great loss for the buyer who committed for a purchase that will take way longer to complete.
Mortgage issues were also cited to have happened along the way. For instance, a buyer could have agreed a purchase price of £400,000 for an off-plan home but its value suddenly fell to £300,000. The mortgage lender could only agree to let them borrow the latter and the remaining amount would have to be shouldered by the buyer.
What are the advantages in buying an off-plan property?
Aside from the joy of living on a new-build and the construction and design inputs you are able to have a hand in during development, you can get a hefty discount on an agreed selling price. Because you are not buying a finished building, the property’s value has a chance of increasing as it nears completion. This means you can leverage on a higher equity or resell the property at a higher price.
How do you avoid losing money when investing in an off-plan home?
Getting a solicitor who knows well enough about off-plan contracts will be a tremendous help to you. First, they can discuss what goes on in off-plan agreements and developments. They could give you a healthy amount of information about mortgage issues and your rights as a buyer – particularly when you find yourself not wanting to push through with the purchase anymore. Your solicitor could give you sound advice to avoid lawsuits for loss of value if you back out and the developer can only sell the property at a lower price.
It also pays to have a keen look at the developer’s reputation. Ask around and search the Internet for the recent properties they have built and find out if they have sufficient liability insurance to cover the reimbursement of your down payment should they happen to lose access to funding during construction.
A thorough and at least fortnightly inspection of the property is advisable to make sure that everything is in order, and is exactly what you and the developer have agreed on.
Lastly and just as necessary, you need to know where you stand when it comes to off-plan property investing. The Consumer Code for homebuilders have provisioned that you may back out of the agreement and be refunded of your down payment if the completions gets delayed, contrary to what you and the developer have agreed on. It will be better to discuss the target completion date of the property before finalising purchase agreements to avoid having to move in to an unfinished home.