Buying into a new development, as with buying an existing house, brings with it pros and cons, and there are a number of considerations to bear in mind in order to make an informed decision and invest wisely.
Perhaps something that most people are attracted to in a new development is that it is a brand new property with no previous owners. In addition, depending on the stage at which the property sale is concluded, the buyer may well have a say in the design of the building, as well as the finishes and fixtures included. Not only does this give the buyer some artistic control over the finished product, but the quality and workmanship of the construction and finishes can also be monitored and signed off once approved.
The building will also be subject to certain certification and inspections, such as the NHBRC and Architects Certification, which affords peace of mind in terms of the structural integrity of the building.
Unlike an existing property that is being transferred to a new owner which entails transfer duty fees, a new development normally incurs a VAT cost. This entitles the owner to a tax deduction at a later stage which can be a significant advantage of buying into this type of property.
Of course, as with any property investment, there are potential negatives that need to be considered.
When it comes to new developments, these risks often come in the form of the unknown and situations that are out of your control. For example, there are municipal requirements that need to be met in order for the property to be appropriately divided and sold, and if these criteria are not complied with, there may well be complications in the sale process.
There are also potential pitfalls in the construction process that result in delays which can have a negative impact depending on how immediately occupation of the property is required.
In addition, because a new development can be viewed as a higher risk investment, banks may require additional documentation before a loan is provided which can add a level of complication to the process.
But while there are additional, or simply different elements to be aware of when investing in a new development, the real benefits lie in research and gathering relevant information.
Most importantly, working with reputable developers can save a significant amount of frustration and offer the best chance of good return on investment, while making very sure where the development is in the process at the point of signing can avoid any unpleasant surprises or delays.
Written by Wessel de Kock