Off-Plan Sales Return, With New Safeguards

Off-plan sales, purchases of homes before they are built, almost disappeared during the crisis. Now they are returning. Established developers are launching new phases and projects, and buyers are responding, attracted by payment plans and the prospect of buying at today's prices.

What has changed since the boom

• Escrow: buyers' payments must be held in project escrow accounts.
• Registration: projects and sales are registered with the authorities.
• Developer selection: launches are dominated by established developers.
• Buyer caution: more buyers plan to hold to completion.

How to assess an off-plan project

• Developer's track record of delivery and quality.
• Project registration and escrow details.
• Location, surrounding supply and infrastructure.
• Payment plan, completion date and penalties for delay.

Advantages

Off-plan purchases often offer lower prices than completed homes, staged payments and the choice of units. Buyers who hold to completion may benefit from capital growth.

Risks

Construction delays, changes in market conditions and specification differences remain risks. Buyers should plan for the full payment schedule.

Speculation

Buyers should be wary of a return to rapid flipping. A healthy off-plan market is one where most buyers intend to use or rent the homes they buy.

Reading an off-plan contract

An off-plan sale agreement sets out the buyer's and developer's obligations over several years, so it deserves careful reading. Key points include the payment schedule and how it links to construction, the expected completion date and any grace period, the consequences of delay, the specification of the unit and finishes, and what happens if the buyer misses a payment. Buyers should check the size of the unit and how it is measured, as well as service charge estimates. Clauses allowing the developer to change designs or specifications should be understood. Taking independent legal advice before signing is a modest cost compared with the value of the commitment, and it helps buyers avoid unpleasant surprises at handover.

Our view

Off-plan buying can make sense with the right developer and project. We help clients evaluate launches carefully and avoid the mistakes of the last cycle.