ROLE OF THE DEVELOPER S
ince the end of the boom days when stories began trickling out about developments that had stalled or failed to complete, property developers
have suffered a rather tarnished reputation. However it is important to remember that there are still reputable property developers out there developing quality projects and resorts the world over. These days it’s possible to buy a new-build property direct from the developer, from agents who work on their behalf, or even through banks who have repossessed their development.
But whether you are buying direct or via an agent, you really should do your research on the track record of the developer. A common misconception is that you’re buying from the agent, but it will be the vendor – and in the case of new builds or off plan that’s the developer – who you will enter into contract with. If anything goes wrong with the build, it’s the developer that you will ultimately be dealing with. Ask them for details of projects they have completed already – solid evidence of prior success and testimonials from people who have bought through them are valuable, and you will also be able to get an idea of the build quality you might expect. Buyers’ online forums can be a useful source of information on this.
What to check First and foremost, you really should expect the developer to build properties that as a minimum reach the building code or regulations of the country where the property is located. Regulations and standards differ from country to country – especially those in hurricane or earthquake zones - and are also still evolving in emerging markets such as Turkey. You can’t always expect the same standards as the UK, so be realistic about this from the start. Secondly, you should expect that full planning
permissions have been received, and if buying off plan prior to permissions being granted, be wary and ensure you will have full rights to a refund if permissions are not obtained. If you’re an investment buyer, you might feel that purchasing before permissions are obtained is an acceptable risk to secure a lower price, but make sure you take due care to protect your investment. Your solicitor must complete due diligence to ensure all the necessary paperwork is in place, and especially if it’s a developer without a proven track record, that they are fi nancially sound.
Buying off plan If you are buying off plan (from the plans, before AIPP CONSUMER GUIDE 41
the property is actually built) you should expect the developer to provide you with a building schedule for your property, with staged payments acting as a form of guarantee. Basically you refuse to pay the next tranche if pre-specifi ed conditions of the build haven’t been met. These staggered payments will be set out in the sales contract - which is legally binding - and four payments are generally typical, starting with a reservation deposit, and ending on build completion. These payments should ideally be held in a
third-party escrow account, so your money is protected if the developer falls into diffi culty; developers can also offer bank guarantees or developer insurance too. Finally, you also want your property to be built on time, and a decent contract will include penalty clauses for every week the scheduled completion date is delayed. The developer should keep you updated regularly on the build progress, usually through a customer services person and/or online updates/blogs. Lastly, of course, there’s the dreaded subject of snagging, and the developer should make himself available to address all issues with the build quality/size and fi nishing once the property is completed.
TOP TIPS
Ë Never sign a purchase agreement or sales agreement without seeking comprehensive, independent, legal advice.
Ë Your legal adviser should perform due diligence on the developer, including planning permissions, land title, and checking any bank guarantees.
Ë You can take out insurances to give yourself additional protection against problems with the build or title insurance (see page 53).
Ë You should also research the track record of the developer thoroughly: how credible are they and how do prior projects measure up in quality, layout and management?
Ë Investigate how the development will be managed on completion – who will do it, how much will they charge? Be aware that these costs are likely to be estimates and could increase once the complex is completed.
SECTION 4 BUYING YOUR PROPERTY
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68