Buying off plan
21/12/15 08:26 Filed in: Property
As Battersea Power Station advertises flats which will only be ready for occupation next autumn, is buying off plan a good idea?Purchasers should be aware of the many dangers that buying off plan can present.
Usually, the developer is unlikely to produce a detailed specification, yet this is vital for a buyer. Glossy sales brochures showing similar schemes completed by the developer may not accurately reflect the property that you are buying.
Detailed plans and a full specification are essential, listing precisely what is being built and the quality and extent of fixtures and finishes included in the price. Paying a deposit and agreeing a price up front can result in savings when house prices are rising as some developers will consider reductions on the full sale price to reflect they have a sale before the property is built.
However, where prices are falling, the buyer could be locked in to a contract that requires them to pay more for the property than it may be worth when completed. Agreeing a price in advance of the development being completed can result in purchasers accepting to pay more than the property is sensibly worth in the open market, simply for the prestige of being one of the first owners.
If other buyers cannot be found at those levels, subsequent prices for other properties in the development may expose those earliest sales as excessive when the remainder of the scheme comes to be sold.
Then there is the added risk of the developer running out of funds before the scheme is complete. A buyer can then be faced with a lengthy and expensive legal battle to see the development finished or to recover their deposit, which in some circumstances may simply not be worth the effort. This is a costly error to be avoided.
Grillo LLP are at www.grillollp.com
and Tel: 01483 860 600