Top 5 tips for buying a home off-plan

Top 5 tips for buying a home off-plan

There is always a few hurdles we all face when purchasing a pre-owned home, these difficulties become more of a benefit rather than a difficulty when you look at purchasing a pre-built home

The most important of these benefits is that there is no transfer duty payable on homes bought directly from a developer or builder, and that is a great deal of cash saved. Instead, VAT is assumed to be included in the purchase price, provided of course that the developer is registered as a VAT vendor.

Being approved for a bond is another difficulty we face, but with a pre-built home, it is often pre-approved by the lender, if it is an established building or development companies, this can make the process of obtaining your home loan a swift and happy one. In addition the developers can give you the opportunity to choose your own finishes and fittings, and sometimes the option to adjust the layout of your new home to your own needs.

Maintenance on a pre-own home can often come as a surprise, but with the ‘green’ design and building principles laws put in place for new buildings within South Africa, you are guaranteed a structural compliant as well as eco-friendly and energy-efficient home, this decreases your maintaince cost and long-term savings.

However there are also quite a few potential pitfalls that those who are considering a newly-built home need to avoid if they want their home-buying experience to be as exciting and fulfilling as it should be.

These include:

  1. Deposit scams when buying off-plan

Anyone can print a fancy brochure full of floorplans and attractive pictures.

However, you should never sign an offer to purchase a home that has yet to be built unless you have seen the land where it will be built and established that the developer has a good reputation, is registered with the National Home Builders Registration Council (NHBRC) and has a track record of successfully completed projects.

In addition, you must make sure that any deposit you are asked to pay is going into the trust account of an attorney or any real estate agency, so you will not lose your money if something goes wrong with the development or the building company.

  1. Long-term developments

Rademeyer says you should never sign an offer to purchase a home that has yet to be built unless you have seen the land where it will be built and established that the developer has a good reputation, is registered with the National Home Builders Registration Council (NHBRC) and has a track record of successfully completed projects.

It can be exciting and financially rewarding to be one of the first owners in a new development. But you need to know that the project will be finished and fully-developed within a reasonable period.

If there are 50 stands, for example, and only 20 homes have been built in the development in the past five years, that is not a good sign and you should probably give it a miss unless the developer can prove to you that the other 30 stands have now been sold and that building on them will be completed within the next few months.

Otherwise you could find yourself living on a “building site” for several years, and unable to sell because the levy income from a handful of owners is insufficient to provide the type of security and the additional facilities that were promised.

  1. Too many 'extras' and upgrades

Check your plans and building contract very carefully before you sign for a newly-built home to see exactly what building materials, equipment, fittings and finishes are included in the specifications, and what else would be regarded as 'extras' for which you would have to pay an additional amount.

Do not make the mistake of assuming that all the top-of-the-line finishes that you see in the developer’s show home will automatically be included in your home, or that the rooms in your home will be the same size. A whole lot of the features you like most may not actually be included in the basic contract, and including them could put the home beyond your budget.

In addition, if you do decide to opt for upgrades, you should not just accept a whole package. Consider each item to see if you really need it or could live without it, and make everything you choose is individually specified in your building contract along with its price.

  1. No completion or handover date

Your contract must contain a date by which your new home will be finished and ready for occupation, or by which, if it is not finished, you will be entitled to cancel the contract and get all the money back that you have paid so far, including the deposit and any progress payments made to a builder.

If it does not contain this clause, you could find yourself at the mercy of a builder who is taking years to finish the project while you make bond repayments on a home you cannot occupy.

  1. No provision to rectify problems

Even newly-built homes can have faults, and whether it is a cracked tile or a major water leak, you should not have to live with it or pay to get it fixed before you’ve even unpacked.

To ensure this you must make sure that your building contract says you will have a certain number of days after taking occupation to draw up a “snag” list of defects for the developer or builder to fix before you finally sign the Occupation Certificate.

You should also retain the right to call in an independent and professional home inspector to help you at this point, especially if this is your first home purchase.

 

Sources:  www.property24.com

               Shaun Rademeyer, CEO of mortgage originator, BetterLife Home Loans