Wednesday, 19th September 2018
LAND & PROPERTY Article
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This Month's Magazine
Buying off plan

Buying off plan

Are there still any bargains to be had? Asks Belinda Cordell

The key advantage should lie in the price, though a lack of transparency in market pricing can sometimes undermine this.

Developers have to compensate off -plan property buyers for the risks they are taking (whenever you hand over money for goods you expect in the future, you are taking some sort of risk), for the delay before completion, and for providing them with capital to help finance the development. Therefore buying off-plan should earn you a discount of anything between 10% and 30% off the current market price for a comparable property in Spain.

Then there is quality. Buying off -plan should mean you end up with a property that incorporates the latest building
techniques and materials. Building regulations have been constantly improving in Spain over the years so brand new properties should be the best on the market, though it does of course depend upon the spec being offered the developer.

Another advantage comes with the guarantees you are entitled to when you buy newly-built property from a developer. Consumer protection laws in Spain cover different types of build defects for different periods,
with the most serious structural defects guaranteed for 10 years. When you buy off -plan you are covered for the
maximum period, though the same advantage would accrue to you were you to buy a property just finished from a developer or investor.


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In some cases developers allow you some say over the style in which the property is finished when you buy off -plan (colours, floorings, certain fixtures). Finished properties have to be bought ‘as is’ with no scope for building in your own tastes from the start. Off -plan property purchases can offer more flexibility in this area, though the policies of developers vary enormously on this matter.

Lastly there is an ‘option’ advantage given the delay between the signing of sale contracts and delivery of your property. Should you change your mind about the development or the area you may be able to sell on the purchase contract to someone else, potentially making a profit in the process, and all without the expense of completing on the property. However it is becoming more difficult to sell on properties before completion due to the great expansion in the supply of new properties.

An increasing disadvantage to buying off-plan property in Spain is that fact that many of the best locations have already been developed and all that remains is 2nd or 3rd tier locations with motorway views. I exaggerate but to a certain extent it is true in areas that have been heavily developed to date, for instance Marbella, but much less of an issue in places like Murcia and Almeria where they are still only revving up the engines on the development front.

Turning to the nitty-gritty problems of buying property off -plan in Spain there are several to choose from. The fact that off-plan property hasn’t yet been built creates all sorts of uncertainties that can turn into problems between the time of signing the contract and delivery of the property. Large construction projects, which many developments clearly are, can run into all sorts of problems leading to delays; for instance bad weather, bad project management and problems with planning permission.

The point to take on board is that delays are more common then the sales organisations would have you believe. It is sensible to expect some margin of delay and build this into your planning and the contracts you sign. 



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