Is buying off the plan a good idea?
Signing a contract for an apartment or townhouse that is yet to be built can be both exciting and daunting. After all, you’re handing over money for a property that hasn’t yet been built. Buying off the plan can be tricky but doing your homework can help prevent disappointment down the track. Here are some tips to help guide you through the process.
Tips for buying off the plan
1. Research the developer and their reputation
This is probably the most important step to determine whether to invest in a particular project. Reputation is everything, so research the work ethics and level of integrity of the property developing company. If it has good reviews and is recommended by others, chances are you’re dealing with a reputable organisation.
Location will usually have an impact on lifestyle, so choosing somewhere close to amenities such as shops, cafes, restaurants and schools is not only convenient but is favourable if the property is to be sold, later. Find out what sort of transport links there are and enquire whether any other development projects nearby are in the pipeline.
3. Building Standards
To ensure health, safety and durability, any building work in New Zealand must comply with the NZ Building Code. Most properties that are bought off the plan allow for the buyer to choose the fixtures and fittings, however it’s a good idea to make sure they are good quality and fully functional.
4. Security & Safety
Whilst it is a requirement for new buildings to be equipped with basic security features, it’s better to be safe and double check than be sorry. Ensure the place has safety fixtures like emergency exits, fire extinguishers and smoke alarms.
5. Other factors to consider
Check that the sound proofing, body corporate and insurance costs, measurements, car parking and warranties are all consistent with what is in the contract.
During the course of building, the developer may still have the right to modify the building plans so it’s paramount to go over the contract with a fine tooth comb and ensure the contract mitigates the risks involved in purchasing off the plan.
Before going down the track of purchasing off the plan, it’s important to get financial pre-approval, especially given the current lending environment in NZ. It is better to get the pre-approval every 60 days or so (depending on lender) than to get to the end and discover you are unable to obtain finance.
Whether it’s to invest or live in, buying a property off the plan can be a great financial decision for the future. Find out how you can benefit from using a mortgage adviser who can help you sort through the nitty-gritty of the contract.