Samuel Seeff, chairman of the Seeff Property Group says you may therefore have to buy with the view to making a few improvements later on.
The advantage of buying off-plan is that you are getting a brand new home and can often choose your finishes and customise it to suit your needs and taste. Many developments offer add-ons such as the choice of an additional bedroom or a swimming pool for example.
Although new developments usually come at a higher price compared to existing property, this is because you are getting a new home with the latest finishes.
Financial benefit – although usually priced higher than existing property, you are getting a new home with the latest finishes where you can just move in with not a thing to be done. There is also usually no transfer duty payable. Some developers may also offer additional incentives to buy.
Fixed price - a deposit is usually needed upfront and the remainder of the purchase price due when the property is built and ready for transfer. By this time, your property would already have accumulated value and the time you take transfer of ownership, it may well be worth more than the price paid.
Future returns – new developments, especially secure apartments, townhouses and estates are often in high demand for rentals and are attractive to investors looking to expand their rental property portfolios. That said, always research the rental potential and rates before deciding to invest if that is your aim.
Trust – with a new development you essentially have to put your trust (and money) into something that you cannot see. All you will probably see, are illustrations of what the development will look like along with a schedule of finishes to choose from.
Delays – if the development takes longer to sell or perhaps some of the final zoning and legal issues are not complete at the outset, there may well be delays in construction. This is likely to result in the occupation date being postponed which could create a level of inconvenience.
Downcycle – check the market conditions because during a down-market cycle, you usually find delays creeping in with some developments put on the back burner until the market picks up again.
Do your due diligence - invest in a credible development, preferably one backed by a credible real estate brand. Do not pay over money unless you are sure of what and where you are investing in.
Inspect the site – do not invest unless you know the area or have inspected the site and development yourself, especially when it comes to holiday properties and developments.
Check the financials – check that sales are taking place and that there is a good take-up in the development. Check for hidden costs. Check the actual plans and actual finishes that are included in the sales price as there are times when some of the finishes come at an additional cost.
A good developer and marketing agent should be able to assist you with all aspects of the development including applying for and securing finance for the property. For this, you will need to pass the relevant affordability and credit worthiness criteria which applies to all home loans.
Keep up to date with the development, be sure to do a regular progress check to ensure all is still running smoothly and according to plan with the development
The Consumer Protection Act (CPA)
Since you are purchasing from a developer, it falls under the protection of the CPA which allows the buyers to give instruction, within three months, to have any non-compliance issues or deviations from the original plans rectified.
Buyers usually also have 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.