Property Tip of the Day - Buying into a development

It’s important that you, as a prospective buyer of a unit in a residential development, do some homework. Development expert Mary Light suggests the following.

  • For starters make sure that the developer has a good track record. The industry has attracted many entrepreneurs in the last few years as a result of the property boom, but nothing makes up for experience.
  • Ensure that the developer has at least three years of residential development - there’s a very big difference between residential developments and commercial and industrial developments.
  • Ask the developer for details of his previous developments and, if possible, have a look at them to ensure that you’re happy with the standard of workmanship. Standards vary and not all developers are perfectionists!
  • Establish whether the land has been proclaimed or not. If it hasn’t, it is often very difficult for the developer to give exact occupation dates and there is also the chance that the development won’t go ahead. The town planning process is extremely rigorous and it’s therefore very difficult even for experienced developers to anticipate council requirements and time delays.
  • Time delays are usually not too serious for investment purchasers but can be extremely stressful for buyers who intend living in the units, so always add on two to three months to the occupation date you are given, especially if the developer has not started the earthworks yet.
  • Find out exactly what costs are included in the purchase price and those that are not. Typically costs included are bond registration costs, transfer costs, transfer duty, and the NHBRC (National Homebuilders Registration Council) levy.
  • Ask for details of all additional costs such as curtain tracts, paving, mirrors and bathroom accessories.
  • If a show unit hasn’t been built, ask to see some samples of the finishes such as tiles, carpets, kitchen cupboards and counter tops.
  • Ensure that your deposit is held with the attorneys in their trust account and with no one else.
  • If you don’t understand a clause in the contract, ask for it to be explained again. It’s very important that you understand exactly what you’re signing.
  • Be very careful about signing a contract that allows for the developer to increase prices. The developer should build anticipated price increases into the cost from the outset.
  • Insist on being given a copy of the contract once all parties have signed it.
  • Ensure that the agent you’re dealing with has a good understanding of the contract and find out if they have experience in new developments and construction.
  • Ask the agent how far along the town planning process is, and how much longer it will take, bearing in mind that it’s very difficult for them to guarantee an occupation date.

Article Supplied by: ProProp