What do you need to know when buying off-plan?
When everything goes smoothly, buying a new home off-plan can be very appealing to househunters, Cripps Pemberton Greenish associate Sheetal Bahal highlights the benefits and the issues to look out for.
Buying off-plan means purchasing a property before it is built. It offers the benefit of knowing you’re the first residents of the home, provides a certain degree of design input and – depending on the market – can potentially be a cost-effective option. With the availability of government-funded housebuying schemes – such as Help to Buy – this option is becoming increasingly popular.
When buying this way you pay the price of the property when you agree to purchase it, rather than the price at the time of completion. As properties are usually rising in value, this could save you money. The developer may even agree to a deal in the form of a discount to reduce the purchase price or an allowance on completion towards your stamp duty and/or legal fees.
Some form of guarantee should also be offered in the event any structural defects develop after purchase. This will inevitably be a condition of any mortgage offer.
Sometimes the earlier you buy, the more choice there is in selecting the best plot, best overall location and for getting the fittings, layout and furnishing you want. You may also have the possibility of making minor layout changes to the property as long as they do not alter the structural integrity of the building or change the minimum standards under the planning permission obtained by the developer. For example, you may change the size of a room according to your liking as long as the overall space of the property doesn’t change.
You could also be involved with the finishing touches in terms of choosing the floor and wall tiles as well as deciding where electrical, telephone, TV and computer outlets are placed. This usually saves money and time and can make one of the most difficult events in life – moving to a new home – simpler.
Finally, buying off-plan will allow you time to save. Payments are usually made in pre-agreed stages and the final balance paid on completion.
So what should you be thinking about? Contracts for off-plan matters are usually lengthy and can be extremely complicated, it is therefore important to ensure you have a thorough and trusted legal representative.
You should also ensure that all deposits handed over – via solicitors – are protected in the event the developer becomes insolvent and is unable to complete the development.
Most off-plan contracts will contain special conditions allowing the developer and you to cancel the contract if the property has not been built within a specified period of time from the day of sale. Neither party can cancel until this period has passed. If in doubt consult your solicitor.
As first seen in the Kent and Sussex Courier.