Purchasing a property off plan

Private Property South Africa

As demand for property continues to outstrip what is currently available to buyers on the market, the off-plan property sector has continued to grow from strength to strength, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He notes that aside from the fact that there is simply not enough properties on the market to meet the current buyer demand, purchasing a home off-plan has grown in popularity because these properties are generally more cost effective to purchase than existing homes with similar features within the same area. This makes this kind of property purchase highly attractive among property buyers and investors alike. “Often homes that are sold within the first phase of a development are more affordable than those sold in the later stages. Added to this the initial deposit required from the purchaser to secure the deal is often comparatively far less than other types of purchases. While buying off-plan may mean that the purchaser will have to wait between six months and a year to take occupation, this can be seen as an advantage, as it gives them time to save up for any other expenses related to the property purchase. In addition, the value of the home will invariably increase between the time the buyer signs the contract and the time the construction of the home is complete,” says Goslett.

He adds that another drawcard that is attracting buyers to off-plan purchases is the fact that they can personalise their home to some degree in terms of the finishes and materials used for some aspects of the build.

The buyer will have a certain amount of freedom in tweaking the design of the property, along with its layout. This is very important to some buyers who wish to have an element of control over the look and feel of their new home

says Goslett.

According to Goslett, a major difference between purchasing off-plan and buying an existing home is the elements that influence the pricing of each. Home prices of existing properties are largely based on the supply and demand in the market, while off-plan home prices are affected by the cost of the building, materials used and the labour.

“A big advantage of buying off-plan is that the purchaser does not have to pay transfer duty. Although still liable for the usual conveyancing fees, a buyer who purchases a home off-plan will not have to make provision for transfer fees over and above the purchase price. If a property is bought during the development stage, the developer will charge VAT on the transaction instead of the buyer paying the regular transfer duty,” Goslett explains. “Transfer duty is generally paid on any property purchase above R750 000. The amount charged is based on a sliding scale that increases with the purchase price of the property. However, buyers who are purchasing a home off-plan will not have to take this into consideration – regardless of purchase price.”

Please note this article quotes Transfer Duty rates from 2016. For the latest Transfer Duty rates click here.


While there are several benefits to purchasing an off-plan property, it also comes with its own set of challenges. “Even though the buyer may have seen an artist’s impression of the property or a show house or two on the development, there is no way of knowing what the final home will actually look like. Most building agreements will allow the developer to deviate from the plans by between 5% and 10% without having to consult the buyer. If the buyer doesn’t monitor the build closely, they could find the layout, size or features of their home altered to some extent. To a large degree purchasing a home off-plan is taking a leap of faith,” says Goslett.

Another aspect to consider is the developer’s credentials, advises Goslett. Before going ahead with any off-plan purchase a buyer should do their research on the developer and check the records of any previous projects they have been involved in. If the developer has been involved in other successful developments, the chances are good that their latest project will be as equally successful. “A buyer is entitled to ask the developer to provide them with evidence of membership to associations such as Master Builders South Africa or the National Home Builders Registration Council,” advises Goslett.

Although it is great to be the first owner of a newly built property, the buyer may have to deal with the construction of other homes surrounding theirs in the initial stages. There is also the matter of dealing with any items on the snag list and possibly establishing a garden from the start. “For the majority of buyers, any issues that they may have to overcome when purchasing a home off-plan, will be a small price to pay for the chance of owning a newly built home that they can call theirs,” Goslett concludes.


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