Although new developments are emerging countrywide, purchasing a new home off-plan is still something that several people try to avoid. This is due to the fact that they cannot physically examine what they are purchasing, or are anxious about it being a complex procedure.
However, in reality, purchasing off-plan is quite straightforward and can be a highly worthwhile investment, according to Charlotte Vermaak, the Nelson Mandela Bay director of Chas Everitt. She says: “The advantages include the fact that if you pick a development in a popular location, the value of your home is likely to rise steeply between the time you buy it and the time it is actually built, so you will immediately have equity when you move in.”
“Newly-built homes come with all kinds of structural guarantees, so that you don’t have to worry about hidden defects, and the fact that you will save on maintenance costs at least for the first few years of ownership. In addition, buying off-plan will usually enable you to have a say as regards the design features, fittings and fixtures, and thus customise your home to your taste.”
Despite this, purchasing off-plan is not without its dangers. Given this, it is important that purchasers take measures to prevent the dangers. Some of these measures are:
Researching the Development
Ensure that you are informed about the schedule of the construction assignment so that you can form a financial strategy, and arrange when to move in. Remember that there may also be additional costs such as boundary walls or fencing, and instant lawn for your garden.
Should your development be incorporated into a larger complex or estate, investigate when the other homes will be completed. If you do not, you risk dwelling on a building site for the initial few years.
Researching the Developer
Make sure that the developer is reputable and has insurance so that if the project does not go ahead, you will get your deposit back. It is best to use an independent lawyer to check the paperwork.
“Before you buy, you should also look at other properties the company has built, to gauge the value for money you would get, and take note of the quality of building and finishing, to get an idea of what you could (look) to expect upon completion.”
Researching the Monetary Implications
Purchasing off-plan has individual monetary niceties. Should the property be a sectional title property, occasionally referred to as a turnkey home, it will be necessary that your home loan be accorded prior to the developer or builder beginning construction. However, the property and the bond will only be registered in your name at the Deeds Office once it is finalised, and the bank’s inspectors have signed it off, and settled to make the home loan funds accessible to the developer.
Should it be a freehold or plot-and-plan property, you will require two home loans – one for the buying of the plot, and one for the buying of the structure. The first will be registered on transfer of the stand into your name, but you will only need to begin reimbursing the second once your home is finished. The developer or builder will be able to draw against the second, called a building loan, in the process of construction, although only as the home reaches specific, customary phases of completion that are signed off by the bank’s inspector and by you.
Monitoring the Construction
Regardless of which type of home you purchase off-plan, it is crucial that you visit the building site frequently and monitor the construction as it progresses, in order to ensure that all is being carried out and installed according to what is stated in your comprehensive building contract.
You, the purchaser, will be the one paying back the loan so any concerns about sub-standard work should be resolved with the developer and the bank before the builder is paid any more home loan funds. Compile a ‘snag’ list at the end of the whole process and go through the completed home, taking note of all the little things that need to be addressed before you sign off the occupation certificate.
Are you thinking of buying off-plan?
Chas Everitt is an established and award-winning real estate group, with the expertise to assist you in selling or buying top of the line developments.
Visit their website at chaseveritt.co.za.
You can also watch their videos on Youtube.
Looking into investment property?
Read Buying Investment Property? Here’s What You Need to Know, to gather effective tips to bear in mind when considering your options.
Zeenat, a digital intern at ELLE Decoration, is a creative at heart with a passion for weddings, fashion and makeup. She adores blissful moments of solitude spent indulging in a warm cup of Rooibos tea, and red velvet cupcakes.
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