Off The Plans Purchase is Safer Now
Updated: May 31, 2019
Finally, buying off-the-plan is made safer. But it is still risky.
What is off-the-plan purchase? It's simply buying a property from a developer before it is being physically built. Such properties are often sold at a cheaper price to entice buyers.
What are the sunset clauses? Very often, hidden in fine print within the pages of the sales contract are clauses which allows the developer to void the sales contract if it takes them too long to build.
Sounds reasonable? Almost every developer sells this clause as a protection for buyers. As they "do not want to keep the buyers waiting, if their projects are delayed". Sounds totally reasonable.
However, in a rising market, developers frequently delays the building intentionally so that they can void the contract. Buyers have the option to get the deposit back (often without interest) or purchase the property at a higher price. So the developers essentially received some interest-free loans for a few years.
The good news is that it is now illegal, unless the court is convinced the delays are legitimate.
So what else could go wrong with an off-the-plan purchase?
Quality - yes, there is no guarantee that the quality meets your expectation. Like they say in investment "past performance is no guarantee of future performance". It applies here too. Quality of past projects does not guarantee the property which you've just bought will be built to similar quality.
Yes, new properties do have a warranty on them. But a developer can get out of their business. Or what happens after the warranty expires?
It is always a safer bet to stick with the reputable builder who has been around for ages.
You'll need to weigh the pros and cons of an off-the-plan purchase. It is often cheaper to purchase, and the end product looks wonderful in the pages and pages of "artist impression" sales brochures. But do be wary of the risks.