Agents warn of off-plan pitfalls

FOR MANY people buying property "off plan" means landing their dream home, but estate agents have warned buyers to tread carefully.

Martin Schultheiss, CEO of Harcourts Africa, said one of the most attractive features of off-plan purchases was that the price was usually all-inclusive.

The other benefit was moving into a home in a planned community, which often offered excellent security.

Schultheiss said off-plan purchases may involve two contracts. "In cluster schemes and estates, buyers actually need to sign two sale agreements - one for the purchase of the land and the second specifically for the purchase of the home to be built."

He said it was essential for buyers to make sure they had a written contract covering every item and specification agreed with the builder or developer.

Carol Reynolds, area principal for Pam Golding Properties Durban North and La Lucia, said, "There are pros and cons to buying off plan as opposed to an existing home. One is securing the property at today's price, but only paying for it once fully developed. The disadvantage is that the development can be cancelled at any time if financial targets are not met and critical mass is not achieved."

Dina Porteous, area principal for PGP in Margate, said that prior to the National Credit Act, buying off plan was a sensible option.

She said the National Credit Act changed this picture considerably.

"Buyers who initially qualified for a bond and whose circumstances might have changed could find out just before registration that the banks had reassessed them and they no longer qualified for the bond.

"Agents who sold these properties have carried themselves for a year with no commission earned and developers sit with unsold stock when the development bond is attracting the highest interest."

Cathy Thompson, Dormehl Property Group's Bluff franchisee, said it was important to make sure that a new development was registered with the National Home Builders Registration Council.

Property Guide (Sunday Tribune)

Posted at 08:55AM Feb 01, 2010 by Editor in Residential  |