It is so important when purchasing your property investment that you have covered and fully understood all of the fundamental areas. At REW the majority of our developments are off-plan and for very good reason. I thought you would be interested to know some of the frequently asked questions asked by our clients.
What are the five main benefits to buying off-plan?
- Off-plan prices are below market value – typically 10%-15% lower than when built.
- Choice of unit – eg: top floor and the best view.
- During construction some developers will pay interest on deposit monies – 3% – 5% per annum interest – paid monthly or accumulated.
- Often for the first one to three years a developer will guarantee a high sustainable rental return.
- Owning a brand-new property with a 10-year build warranty.
How does the developer value the property?
Depending on the location and type of the development the developer will look at local market conditions and survey like-for-like competitor prices within the area. In some cases developers will pay for an independent RICS survey however they are commonly a misrepresentation of the value as they do not take into account specification of the interior fit-out and furniture (if included).
How protected is my money during construction?
Contractually whatever money you part with will be used for the build of the development you are buying a unit in. This is drawn-down in tranches from the developer’s solicitor. Developers, as per the example given below, will set out the payment plan per project with the idea that the deposit monies will get the development off the ground, and then commonly if the deposit paid is lower than 50% of the purchase price, a tangible stage payment at roof level will be asked for and the rest upon completion.
What are the typical payments I will need to make? i.e. is there a stage payment?
It depends on the project and the developer, but as a guide a common payment plan would be:
50% – Deposit on Exchange
50% – Completion balance
25% – 40% – Deposit on Exchange
25% – Roof stage payment (dependent on if buying with aid of a mortgage)
25% – 60% – Completion balance
How can I ensure the build quality?
Visit the developer’s previous developments and look at the quality of what they have brought to fruition, or visit the show unit of the project you are interested in. Also ask your designated sales consultant for a build specification.
If you would like to read some reviews from our clients who have bought off plan with us, please click here.