Buying a property off-plan

Buying off-plan can seem daunting for purchasers as you are buying a property that is yet to be completed. On the upside, this has become a profitable approach to the property market and indeed, the proverbial early bird does then catch the worm. There are of course many factors to consider before such a decision is made.

Buying Property On Auction | Property Blog Articles

Many property developers will have a show unit available where prospective buyers can view what the completed property will look like. Should a buyer be interested, he can then decide on a unit off the architectural and site plan.

Factors such as the estimated completion date should be considered at this point. The specific unit will then be reserved when the Offer to Purchase (OTP) has been completed and signed by the relevant parties. A deposit will also be required and is to be paid across to the transfer attorneys attending to the registration process.

Before this is done, prospective purchasers are advised to have a look at previous developments within the property developer’s completed portfolio. This will give a good indication of their reliability and the quality of the workmanship that can be expected. Further, purchasers should also consider what the price of a similar unit in the property market is.

Benefits of buying off-plan

One of the main advantages of buying off-plan is that the units may sell at a reduced price compared to what the value of the same unit will be after completion. This aspect has become an important selling point for purchasers and investors alike. Further, no transfer duty is payable as the developer will be a registered VAT vendor and this VAT amount payable is included in the purchase price.

Ensuring a good investment

Whilst the building process is underway, a number of people including the local municipal building inspector, structural engineers, bank assessors and the NHBRC inspector will monitor the progress to ensure that it meets the required building regulations.  

It is advised that purchasers ask questions and be made fully aware of any additional costs. For example, it might be that specific finishes come at a higher cost than others.

Because buying off-plan can also be a lengthy process, if the property is being bonded, make sure that if interest rates do rise before date of completion, this does not stretch your budget too much. For investors, it’s wise to invest in developments where rental demand is high, as this will ensure that you are not left with a unit that is empty for prolonged periods of time.

After the unit has been completed, the developer or his representative will arrange a final inspection. Purchasers are advised at this point to do a thorough inspection and to go through their new home to ensure that all fittings, fixtures and workmanship is up to standard and meets the specifications as agreed in the OTP.

Follow Snymans on Facebook for more legal information, tips and news about property.

6529

Recommended for you

Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Beetle free certificates

2744

There are a number of compliance certificates that a seller is required to submit to confirm that the property is in good condition, prior to concluding a sale. Some of these certificates are only required under specific circumstances, for example the borer beetle certificate.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Joint ownership is not all love and romance

2786

There’s no denying that it’s tough to break into the property market and that doing this with your partner can be both a financial imperative and an exciting and romantic idea. While there are certainly benefits to jointly buying a property with your partner, it’s also important to go in with your eyes wide open for this endeavour to have the best possible chances of success.

Read More
Property Transfers | Bond Registrations | Snymans Attorneys
Contractual Matters

Making your property work for you – the do’s and don’ts of running a guesthouse

2872

Opening a guesthouse can be a lucrative endeavour, but before taking the plunge and converting a residence into a financially rewarding business, there are important steps to be followed and considerations to be taken into account.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Immovable property and inheritance

5942

According to South African law, an individual has the right to dispose of his or her estate as he or she wishes by stipulating this in a will. However, this right may be limited when in the public interest.

Read More
Snymans Attorneys | Residential and Commercial Property Transfers
Contractual Matters

This is your year for a successful property sale

5915

A new year always brings with it endless opportunity and is the perfect time to forge ahead with new plans and make the first move to achieve goals. If your aim is to sell your property, then follow these keys steps in helping to make sure it’s a successful and lucrative process.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

Buying a property off-plan

Buying off-plan can seem daunting for purchasers as you are buying a property that is yet to be completed. On the upside, this has become a profitable approach to the property market and indeed, the proverbial early bird does then catch the worm. There are of course many factors to consider before such a decision is made.

Buying Property On Auction | Property Blog Articles

Many property developers will have a show unit available where prospective buyers can view what the completed property will look like. Should a buyer be interested, he can then decide on a unit off the architectural and site plan.

Factors such as the estimated completion date should be considered at this point. The specific unit will then be reserved when the Offer to Purchase (OTP) has been completed and signed by the relevant parties. A deposit will also be required and is to be paid across to the transfer attorneys attending to the registration process.

Before this is done, prospective purchasers are advised to have a look at previous developments within the property developer’s completed portfolio. This will give a good indication of their reliability and the quality of the workmanship that can be expected. Further, purchasers should also consider what the price of a similar unit in the property market is.

Benefits of buying off-plan

One of the main advantages of buying off-plan is that the units may sell at a reduced price compared to what the value of the same unit will be after completion. This aspect has become an important selling point for purchasers and investors alike. Further, no transfer duty is payable as the developer will be a registered VAT vendor and this VAT amount payable is included in the purchase price.

Ensuring a good investment

Whilst the building process is underway, a number of people including the local municipal building inspector, structural engineers, bank assessors and the NHBRC inspector will monitor the progress to ensure that it meets the required building regulations.  

It is advised that purchasers ask questions and be made fully aware of any additional costs. For example, it might be that specific finishes come at a higher cost than others.

Because buying off-plan can also be a lengthy process, if the property is being bonded, make sure that if interest rates do rise before date of completion, this does not stretch your budget too much. For investors, it’s wise to invest in developments where rental demand is high, as this will ensure that you are not left with a unit that is empty for prolonged periods of time.

After the unit has been completed, the developer or his representative will arrange a final inspection. Purchasers are advised at this point to do a thorough inspection and to go through their new home to ensure that all fittings, fixtures and workmanship is up to standard and meets the specifications as agreed in the OTP.

Follow Snymans on Facebook for more legal information, tips and news about property.

6529