Payment Advice For Off-plan Buyers

If you‘re a home buyer purchasing property “off plan” – or in advance of your home actually being built – you will most likely have more money issues to deal with than those purchasing a pre-owned property.

And the first of these is the matter of the deposit. It is very important, says Berry Everitt, CEO of the Chas Everitt International property group, that you do not pay any deposit for a stand or an off-plan home – or sign any agreement to purchase such a home – until you have thoroughly checked the credentials of the developer and/ or home builder and made sure they are well-established operators with a track record of completed and successful developments.

“You should also make sure that your deposit is only paid into the trust account of an attorney or a registered estate agent – not the bank account of the developer or builder. There have been far too many cases in recent years of bogus estate agents, builders’ agents and construction companies taking deposits for proposed developments and then simply vanishing.”

He says the second thing to consider is the possibility that you may need two separate home loans – one to pay for a stand and the other for the actual structure – if the development is not sectional title.

“The second loan is often called a ‘building loan’ and is used to pay the building contractor in instalments known as draws. These are paid as certain stages of the building work are completed to the satisfaction of the financial institution.

“However, you as the buyer will have to sign each draw form authorising the bank to pay, so you can have a large measure of control over the way the work is done. And you should exercise this control by visiting the building site frequently and monitoring the workmanship closely so that any problems can be rectified immediately – and certainly before the builder collects the last draw.”

In addition, says Everitt, you should never occupy or sign for the keys to your new home before you’ve checked it over thoroughly once more, and got the builder to agree in writing to rectify any remaining “snags”.

“And lastly if you’re a VAT-vendor or are buying the property in the name of a VAT-registered enterprise, you should consult your accountant about reclaiming the VAT payable on the purchase of a newly-built home.”

08 Jul 2010
Article by Press