Buying off the plan

Many property developers and builders will often sell all or part of their development before the building work is completed to generate cash flow and to finance the development (or future developments). The practice is known as selling off the plan.

In this section we highlight the advantages and disadvantages of buying off the plan.

Advantages of buying off the plan

• Most developers will offer a substantial discount off the price of a property bought off the plan. This is to compensate off the plan buyers for the delay before completion, and for providing them with capital to help finance the development.

• A deposit (usually 5 to 10%) is required to secure a property with the balance not payabe until construction is completed.

• In a rising market property market, it is possible for the value of the property to increase between the period of signing the contract and construction completion.

• In some cases developers allow you some say over the style (e.g. colours, floorings, fixtures) in which the property is finished when you buy off the plan.

Disadvantages of buying off the plan

• The property market may decrease between the time you sign the contract and construction is completed.

• The development could incur delays resulting in a later than expected completion date. Bad weather, poor project management and planning approval delays can slow down the rate of construction of new developments.

• It might be difficult to visualise dimensions such as room sizes, garden size or proximity to neighbouring houses.