A quick guide to buying property off-plan
Category Advice
In its simplest form buying off-plan happens when the buyer purchases property in a cluster or sectional title development. "We talk about 'off-plan' because typically only a sample unit will have been built, which means the buyer is essentially purchasing what they see on the builder's plan or developer's blueprint, rather than an actual property," Skoko Sebola, Principal at Leapfrog Midrand, explains.
The plans should offer a clear image of what the final property will look like. Many developers are also able to show the potential buyer 3D renderings of the property, which offers a very realistic picture of what the property is to become.
What are the advantages of buying off plan?
The big drawcard for buying off-plan is that there are no transfer fees payable and VAT is included in the purchase price. Sebola explains that this provision is what makes buying off plan especially appealing to first-time buyers as it makes it somewhat easier to get into the property market.
What's more, these properties typically sell at a reduced price, compared to what they would sell for upon full completion. "Construction of the property can take anything from 18 to 24 months, which means the property can be worth as much as 10% more when it is ready for occupation, compared to when it was purchased off-plan," Sebola says.
Since the property is being built from scratch the buyer is often able to give input into the layout of the property and/or choose the finishes, including flooring, sanitaryware, light fittings and cupboard themselves. "Depending on the development, buyers may also get to choose the stand the property is built on," Sebola shares.
Another great advantage is that the property is brand new when the owner takes occupation, which is especially appealing to buyers looking for something fresh and modern.
What about the risks of buying off-plan?
Unfortunately, as with any financial transaction, there is also a small chance that things could go awry. "The biggest risk when purchasing off-plan is that the final product doesn't meet the expectations of the buyer, created by the plans," Sebola says
Fortunately there is some legal recourse if things go wrong since the buyer is guarded by the Consumer Protection Act, which allows the buyers to give instruction, within three months, to have any non-compliance issues or deviations from the original plans to be rectified.
The buyer also has 12 months in which they can instruct the builder to fix roof leaks that result from inferior workmanship or building materials. Major structural defects that are attributable to non-compliance to technical building standards must be fixed by the builder in the ensuing five years.
Use the handover inspection to your advantage
It is best practice for the developer to do a walk through inspection with the new owner before occupation. Buyers should use this opportunity to check on the following:
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Check that the walls and door frames are straight
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Make sure the plugs all work
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Check the plumbing, including silicon sealing around sanitaryware in kitchen and bathrooms
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Ensure there are no hairline cracks in tiles or walls
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Check that the doors of cupboards open and close properly
What are the need-to-knows for the buyer?
Any property transaction should be approached with some measure of caution... and an open mind. "Keep in regular contact with the developer, ask questions and raise any concerns timeously. It also pays to regularly visit the building site and take an active interest in the process, because that way you're more likely to avoid any big disappointments on occupation day," Sebola says.
If in doubt about any aspect of buying off plan, make contact with a trusted property advisor who can offer advice and guidance.
Author: Leapfrog Property Group
