1 PLANNING YOUR PURCHASE WHAT TO BUY –
NEW-BUILDS B
rand-new properties can be divided into those that are bought off plan (before they are built) and those that have already been constructed. Until fi ve years ago, buying off
plan was the investor’s favoured method of buying property, but then thousands of new homes stalled on the drawing board or the building site. So where does that leave buyers now? Well in
some buoyant markets, off plan is still thriving (parts of Turkey spring to mind), especially at the higher end of the market, where a custom-built property is required. Of course buying off plan has historically been a way
of paying less for a new property - purchasers secure a discount by taking a leap of faith and buying something not yet built. After paying a deposit you then pay the rest in stage payments as the build progresses. But in topsy-turvy markets where new-builds can’t
compete with the affordability of heavily-discounted resales, many people won’t take the risk of waiting a year or two for a property to materialise and off plans have lost some of their shine. Of course there are advantages of cherry-picking
the best units in a development and infl uencing the plans, whether in reconfi guring a layout, getting the best views, or choosing the fl oor tiles and fi ttings. The key thing is whether the developer is able
to deliver what he promises – and what guarantees you might have if he doesn’t. Many of the dubious builders have long gone out of business now but you should check out the developer’s track record and recent projects. Ask yourself whether the risk of buying something
that doesn’t yet exist really is a better proposition than a resale property you can move into/start renting out in three months’ time, but which won’t match the brand-new feel of a property you are the fi rst to live
in. And the same goes for if you are buying a newly completed property on a part-completed development. Unfortunately there are developments far and wide
full of newly built but unsold properties, so you have to ask yourself have they been built in the right place, are they built to a decent quality, or are there just too many of them for the level of demand? You don’t want to buy on a ghost community where unpaid maintenance fees can mean ill-kept common areas. Buying a “distressed” property or bank-owned
property comes with its own complications (see page 20 Deals, Deals…) and independent legal advice is imperative. Equally, though, do consider the benefi ts of
new build, which deservedly has many converts. Unlike off plan, you see exactly what you’re getting,
and at the same time benefi t from a brand-new property. There are usually no nasty surprises about size, blocked views or how close the neighbours are. New-builds are built to the latest building standards,
and usually come with a ten-year guarantee – though remember, these might not be the same as the UK – and in countries such as Italy fi tted kitchens aren’t included in the price. Although you may be liable to a VAT type tax on
new-builds (in France it is 20 per cent), generally you could expect very little extra outlay on top of the purchase price, although beware of over-priced furniture packages. But a big plus point is that new-build properties are
usually easier and cheaper to maintain, and this is a distinct advantage for those renting out their homes. In some highly competitive (and lucrative) holiday
rentals markets such as Ibiza and Kalkan in Turkey, the latest generation of new-builds (with integrated technology, sophisticated lighting etc), have become almost a must-have.
OUT WITH THE OLD, IN WITH THE NEW?
Do the benefi ts
of buying off plan outweigh the risks for you? What guarantees
are there the developer will be able to deliver the project? Due diligence by an independent lawyer is a MUST. This should include planning permissions and building guarantees. Ensure your deposit
is protected in case the developer is unable to complete the project. What taxes will be
payable on your new- build property? Some countries (eg Spain) have temporarily reduced VAT on new-builds to encourage buyers. Are all the fi xtures
and fi ttings – and kitchen - included in the price?
AIPP CONSUMER GUIDE 9
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