What does it mean?
Pre-construction purchase of property is becoming more and more popular as investors seek to maximize their returns. Basically, buying off-plan means that you reserve your chosen property on a new development before the construction is completed, often before it has begun.
How it works?
It is very profitable to choose this option for property purchase as the prices and this stage are very low. In addition you would have to pay 30% of the purchase price as a deposit and then nothing more until completion which can then be financed by a 70% mortgage, if you have purchased the property as an investment.
As construction begins and the development takes shape, the purchase price is increased substantially. Once the development has been completely finished, other interested parties are willing to pay more for the completed property rather than empty piece of land.
Advantages of buying off-plan
In addition, if you sell the property before completion, before possession of the title deeds there is no Capital Gains Tax to be paid no matter how much profit you have made.
Buying off-plan property does not mean just reserving a property on new development before the property is completed. It means that the buyer becomes the actual owner of a future property by investing only 30 % of the property value at the present time.
If you are buying off-plan property not as an investment, but as a holiday or permanent home, there also many advantages of it. When a new development is released the prices are generally more competitive than market prices.
Of course, there are some issues regarding buying a property off-plan. It is possible that for up to a two year construction period can elapse before the completion of your property. But, there is a law whereby all down payments made before the completion of the property/development have to be secured either by bank guarantees or insurance policies. It is vital to check with your lawyer to ensure that these assurances have been provided for.