Buying a Home Off-Plan

Developers often sell properties before they have been built, sometimes with exchange of contracts taking place before building even begins - this is called buying off-plan. In a rising market it's possible to make a good profit buying off plan and selling before completion (termed back-to-back sales), thus making a profit without actually buying the property.

When buying off plan, you may only have the architect's plans, specifications and drawings to help you to visualise your new house; however, many developers may have a show house that you can inspect on-site.

Before you commit:

• When looking round the show home, note whether artificial light is used during the day. Has the furniture been scaled down to make the rooms look bigger? Have the internal doors been removed to save space?
• To help you imagine the space offered in the new property, check the internal and external measurements on the plan against the measurements of your current home.
• Check the small print of the reservation agreement to make sure that the property you are reserving has the same specifications as the show home or the property in the plans.

Ask the developer the following questions:

• Has final planning permission been granted or are some aspects of the development still pending?
• What fixtures, fittings and finishes are included in the total price? Are any of these to be paid for as they are installed? Some developers include decorating, carpets and curtains in their price.
• Are there are penalty clauses if the developer misleads you or is late completing?

If you are happy with the plans and specifications, you will be required to sign reservation papers to reserve your new home. The contract will contain the timetable for the property's completion, payment dates, the completion date and penalties for non-completion, guarantees for building work and a copy of the plans and drawings. Don't put your own house on the market or give notice on a rented home until you've been given an absolute date of completion of building works.

At this point you will normally be asked to put down at least 10% of the price as a deposit and pay an amount in legal fees to exchange contracts; this legally obliges you to go through with the purchase.

The remaining payments are usually spread over the period of construction, with payments made in stages as building work progresses. You may be able to choose your bathroom, kitchen, wallpaper, paint, tiles and carpets, some (or all) of which may be included in the price. You may also be able to alter the interior room layout, although this will usually increase the price.