THINKING OF BUYING A PROPERTY OFF PLAN?
The thought of buying a home that no-one else has lived in is a very appealing concept to many buyers, which is why off-plan property purchases have become so popular over the years. Especially in boom markets where the demand for homes outweighs what is available for purchase.
It can be more cost effective
Other than the fact that no-one else has owned the home before you, another reason that off-plan purchases have grown in popularity is that these properties are often less expensive to buy than existing homes with similar features within the same area.
Often homes that are sold within the first phase of development are more affordable than those sold in the later stages. Additionally, the initial deposit requirements are often comparatively far less than other types of purchases. Buying off-plan may mean that you will have to wait between six months and a year to take occupation, but this could be an advantage, giving you more time to save up for the other expenses related to the purchase. Also, the value of the home will invariably go up from the time you sign the contract to the time the home is complete.
Make it your own
Another drawcard is that you can personalise your home to some degree regarding the finishes and materials used for some aspects of the build. You will have a certain amount of freedom in tweaking the design of the property and its layout.
NO transfer duty
Yes, that’s right – NO transfer duty. Although still liable for the usual conveyancing fees, a buyer who purchases a home off-plan will not have to make provision for transfer fees over and above the purchase price. If you buy a home during the development stage, the developer will charge VAT on the transaction instead of the regular transfer duty.
So what’s the catch?
There are several benefits to purchasing a property off-plan, but it has its challenges. Even though you may have seen an artist’s impression or a show house, there is no way of knowing if the home you get will meet expectations. Most building agreements will allow the developer to deviate from the plans by between 5% and 10% without letting you know. So, if you don’t keep a close eye on the build, you could find the layout, size or features of your home altered to some extent. To a large degree purchasing a home off-plan is taking a leap of faith.
Do your research
Check out the developer beforehand. Before going ahead with the purchase, do your research on the developer and check the records of any previous projects they have completed. Chances are if their other developments were a success – yours will be too. Remember that you can also ask the developer to provide you with evidence of membership to associations such as Master Builders South Africa or the National Home Builders Registration Council.
Although it is great to be the first owner of a newly built property, you may have to put up with living on a building site during the initial stages of the development’s construction. There is also the matter of dealing with any items on the snag list and possibly establishing a garden from the start. All that said, any issues that you may have to overcome when purchasing a home off-plan will be a small price to pay for the chance of owning a newly built home that you can call yours.