BUYING OFF PLAN
Category Useful Information
Buying off-plan is attractive if you want to own a new property and be the first to live in it. Most developments include all the costs involved so the price you see is the price you pay. This usually includes Vat and Transfer duties.
Buying off-plan requires minimal maintenance, as everything is brand new and, in some circumstances, you may be able to choose the finishes or some of the finishes.
When buying off-plan the purchaser signs two agreements. The purchaser signs one contract to purchase the land and also enters into a building contract from the developer. The building agreement should include all information relevant to the construction of the property. This includes:
- Building Price
- A site plan
- Unit/ Floor plan
- Finishes schedule
- Electrical wiring
As the construction progresses, the developer draws down funds from the purchasers building loan, after the purchaser has authorised such payment. This allows the purchaser some degree of control and ensures that the development progresses in order for the developer to get paid. Should the property be financed, the Mortgagee (Bank) ensures that the construction progress is inspected regularly by independent quality surveyors and valuators, which mitigates the risk on behalf of the purchaser and funder prior to the release of payment to the developer/ contractor.
If you pay a deposit, check the contract to ensure that the deposit is refundable.
NOTE: Developments are required to be pre-approved by All 4 Major Banks (FNB, Nedbank, ABSA and Standard Bank).
The Banks legal departments scrutinize the agreements of sale, specification supplied by the developer, status in terms of registration with the NHBRC, elevations, layouts, etc prior to pre valuation approval.
Completion and occupation are usually estimated, however, building progress may be delayed due to various reasons such as weather conditions, delays in the delivery of supplies, etc. It is not unusual to experience delays.
The CPA provides for a 6-month snag period from the date of occupation of the property. Possible points to look at when writing a Property Snag List includes the following:
- Check the plumbing for leaks
- Check that all the taps are not leaking
- Check that all the fittings are the correct fittings and that all the fittings have been installed
- Make sure that the kitchen and bathroom have silicone around the basins and baths
- Make sure that there are fittings for your washing machine and dishwasher
- Make sure that the oven and stove are working
- Ensure that all the cupboards are installed, are not damaged and open and close properly
- Ensure no windows or glass doors are cracked or broken
- Open and close all windows and doors to ensure that they work properly
- Check the tiles for hairline cracks, a satisfactory grouting job and that they are correctly laid
- Ensure that light switches and plugs are all covered and are working
- Check the walls for cracks and damp
Author: Futuredev Properties