Should you buy off-plan?

Buying off-plan is often an appealing option for buyers who want a new, hassle-free home, but building delays and fine print can obstruct the path to the dream package.

Susan van Aswegen of Sotheby’s International Realty, operated by Lew Geffen says, "Ninety-nine percent of developments include all costs in the unit price. This is beneficial and appealing to the buyer in that the price they see is the price they pay.

"Buying off plan allows the purchaser to put down a 10 percent deposit initially, delaying their responsibilities of bond repayments which usually only kick in 18-24 months down the line. In that period, the value of their investment can grow substantially, especially if the current buoyant conditions in South Africa’s property market persist.

"Delayed payment responsibilities make off-plan purchases ideal for first time home buyers, giving them time to save and arrange mortgages."

Van Aswegen notes that in plot and plan developments buyers take transfer of the plot and enter into a building contract with the developer to build the house. If transfer duty applies it will only be payable on the purchase amount of the plot and not the building agreement amount.

"Buying off-plan is similar to buying a new car — it usually requires minimal maintenance, interiors and exteriors are new and you’re not buying someone else’s hassles.

"There are however some disadvantages when buying off-plan which include buyers having difficulty visualising the size and the exact interior layout of the property with only computer generated images to go on. In plot and plan developments, for example, what one sees in the images may not represent exactly how close properties are to one another or the quality of the workmanship and finishes until it’s too late."

Van Aswegen adds that in worst case scenarios developers can change the layout once they start building therefore it is extremely important for the buyer to read all the fine print and ensure that strict guarantees are in place.

"There is not always a fixed date of completion in the buyers contract and there is usually a delay in completion which can be exacerbated by factors such as bad weather, ‘dodgy’ municipal approvals or the developer running into financial difficulty.

"Factors like these can stop a development altogether or mean that moving in dates are pushed back by months adding to interim accommodation expenses.

"It is vitally important to check the credentials and the track record of the builder and the developer and if possible view previous developments they have been involved in."

Article from: http://iafrica.com