In a tight housing market, buying an apartment, townhouse or house off the plan can be a very attractive proposition. As well as securing a brand new property, you will only have to find an initial deposit of 5-10% of the developer’s asking price for the property. You will then have a long settlement period while the development is being built to get your finances in shape to pay for the remainder on completion of the project. In addition, if the property market is buoyant during that period, the value of your property will have increased by the time that it is finished.
However, buying off the plan is not without its risks and in fact probably carries more risk than buying an existing home. For example, the property market may fall during the period of construction so your property may not be worth as much as you paid for it. Other risks include the possibility that the finished property does not meet your expectations; that the development takes much longer to complete than originally planned or that the developer’s business may fail mid-project.
So, before buying a property off the plan, it is vitally important that you do your due diligence. Here are the most important things that we suggest that you should do:
A solicitor will ensure that the contract includes a ‘sunset clause’ which specifies what will happen if the development is not finished in time and will also be able to offer advice as to what will happen if the developer goes into liquidation and the project sold to another company.
As space becomes more of a premium in our larger centres, we are likely to see more and more developments where buyers will have the opportunity to buy a property off the plan. While, for many reasons, this will be a very enticing proposition, it is not an arrangement to be entered into lightly or without significant caution. Our team of experienced property lawyers here at Wakefields Lawyers have extensive experience of advising clients of the benefits and pitfalls of this arrangement and would be more than happy to assist you with answering any questions you might have.
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