Buying property “off plan” holds many benefits for first-time buyers and others without large sums of cash for transfer duties and other hidden costs, but there are some potential pitfalls.
Martin Schultheiss, CEO of the Harcourts Africa property group, says one of the most attractive features of off-plan purchases is that VAT is built into the sales price. “It means a considerable saving in up-front expenses for homebuyers since no transfer duty is payable and the price you see is by and large the price you pay. “Other benefits include moving into a brand-new home in a planned community, which more often than not offers excellent security measures. On top of that, buyers are often able to customise the layout or finishes of their new home to suit their own preferences. “However, buying off plan does present some challenges, including the fact that buyers usually have to base their decisions on graphics such as building plans and architects’ drawings as opposed to physically inspecting an existing home.” In addition, Schultheiss adds, not many buyers realise that off-plan purchases may involve two contracts. “In cluster schemes and estates, buyers actually need to sign two sales agreements – one for the purchase of the land and the second specifically for the purchase of the home to be built. “And the lack of a written contract pertaining to the building can cause confusion and could quite easily lead to lengthy disputes between buyer and developer. “It is thus essential that buyers make sure they have a written contract covering every item and specification agreed with the builder or developer, including the price, the floor plan and details such as wiring, plumbing, fittings and fixtures, and paint specifications. “They should, of course, also only buy off plan through a reputable estate agent or developer with a strong track record.”