In essence, buying off-plan simply means buying a house before it’s actually built. While this might sound strange buying an off-plan property can be a smart investment, particularly on the Costa del Sol. Here are some benefits you are likely to reap if you buy an off-plan property.
Advantage of buying off-plan properties
1. You secure purchase below market value
If market prices are going up – as they do most of the time – buying your home before it’s completed means that by the time you move in, it’ll be worth more than what you paid for it.
2. You can buy the property with lower deposits and staged payment
Depending on the seller, some off-plan contracts have the supplementary merit of staged payments. This helps lower the burden of cost and benefits the investor that would otherwise have to deposit a hefty amount. You can pay 30% or 40% of the total price in instalments before the property is completed usually within a period of 18 months.
Buying an off-plan property helps you plan your life without pressure. Take the example where you plan on retiring in a couple of years, and you buy your retirement home in Spain as an off-plan property. You can start buying your retirement home today, go through your last year of working stress-free and move into your house just after its completion.
Whether you plan to live or resell the property, one of the principal advantages of buying an off-plan is to be able to choose and customize most aspects of your next home. Unlike a completed development, you get a chance to select the ideal unit that fits your taste, needs, and budget. You can have the option of personalizing some aspects such as the kitchen, walls, or flooring. It’s essential to have a meeting with the project’s architect so they can answer your questions and propose possible changes.
The buying process of off-plan properties
While sales in resales and New Build remain somewhat stable, off-plan sales have taken off and are growing rapidly. With this off-plan boom in mind, I thought it would be a good idea to publish a gentle reminder on the seven tips new-build buyers should consider.
1- Hire a Lawyer
Once you have found the property you love, my first recommendation is to hire a qualified attorney to assist and guide you throughout the legalities of the purchase process.
2- Due Diligence
Do your due diligence on the developer of the property that you intend to buy. You can get this information from the commercial register and make sure they are correctly registered under the developer’s name. The developer will then provide you with a plan of the property together with a detailed report of an accurate description of the quality specifications of the constructions materials to be used.
3- Land Plan
At this stage, it’s essential to inquire about the land plans of your surroundings in the near future. So you can be aware of any nearby buildings that are likely to obstruct your views. You can find this information in the Town Hall.
4- Building License
Once the developer has been granted the Building License, it is time to formalize the purchase. A Private Purchase Contract (PPC) is to be signed between you and the seller. On a typical scenario, you’ll be required to deposit the 30 or 40% of the property’s price during construction. The remaining 60 or 70% is required once the property is delivered and public deed of sale signed. An essential recommendation is not to sign a Private Purchase Contract unless the town hall where the property is located has issued a Building Licence for the development.
5- Bank Guarantee
Once your lawyer has checked that there is a valid Building Licence granted, it’s time to sign the reservation contract. The instalments paid while the property is under construction are guaranteed by what we call a ‘bank guarantee.’ A bank guarantee acts as a safety net securing all your stage payments, in case the developer fails to finish your property.
6- Snagging List
Once the property is finished and before you sign the Public Deed, you should always make a “snagging list” of the property. It is to determine that everything is in perfect condition and following the quality specifications list issued. You can either draw up the list yourself or appoint one of the many reputable companies that may carry it out on your behalf.
7- First Occupancy License
You should note that the property must have a First Occupancy License (FOL). It is a document dispensed by the Town Hall which confirms that the newly-built property fully matches with all planning and construction regulations and it is ready to be used as a dwelling allowing the purchaser to live in the property legally.
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