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Buying Off Plan

Buying off plan basically means reserving a property often by up to 15% off market price. The advantage if this is that as the various stages of the development get underway its value increases, typically a development takes approximately a year and a half to two years for each phase to be completed.

Buying Off Plan - Advantages

  • Its virtually risk free.
  • Property prices are still rising by up to 30% on some parts of the Costa Del Sol.
  • Some developers are offering discounts of up to 15% off market prices when buying off plan, particularly at the earliest stages of a new development.
  • Prices of new developments will increase as each stage of the development is completed. For a relatively small deposit you can fix the price at the discounted off plan level.
  • A deposit on a property will see the capital growth on the properties full value.
  • Up to two years in some cases to decide weather and when to sell your property or to keep it as a holiday home.
  • We only deal with developers who have bank guarantees and/or building licences and permits in place.
  • If a developer is unable to finish a development, provided that bank guarantees are in place any monies paid will be refunded with interest @ 6%.
  • Prime sites are becoming more and more scarce, particularly those with a sea or golf course view.
  • If you do decide to keep your chosen property letting it (which we can arrange for you) will usually cover the mortgage, Taxes and service charges etc
  • Your property would be priced below today's market value.
  • No Tenants, service charges or maintenance costs.

Buying off plan - Disadvantages

  • Some developers will not allow resales until the development is completed and you have completed on the finished property.
  • If you do not sell you are legally bound to complete on the property.
  • Price rises could slow down.
  • Views can change as more developments are constructed.

Example of how an off plan investment could work for you

  • A property is available for £170,000
  • The deposit is usually 30% - £51,000 (5 to 10% of this is payable at the time of viewing/reserving a property in order to freeze the price).
  • The outstanding balance of 70% does not need to be paid until the property is finished (this can be as long as 2 years) even if you decide to sell prior to this stage.
  • During the building process the property value will increase to £260,000.

Assuming that you sell for £260,000 a gross profit of £90,000 would be made on an investment of £51,000. don';t forget that legal fees, tax and commission will need to be deducted but a healthy profit will remain.