Property Flash


As the term suggests, opting for an off-plan property means purchasing something that hasn’t yet been built. It’s risky in a country where the economy is barely growing, unemployment is rampant and service delivery from the state is in a very poor state. There is also political chaos at a local government and municipal level. But Jacques Van Embden, managing director at Blok Property Developers, said in a recent discussion that choosing to buy a place off-plan comes with numerous long-term benefits.

“There are major advantages to pursuing the off-plan route. The important thing is to know what you’re getting yourself into, and understand how to mitigate risk,” said van Embden.

Why purchasing off-plan is a great idea

Buying an off-plan property can be financially beneficial. Off-plan properties are new and they tend to require far less maintenance, especially in the first three to five years after being purchased. You probably aren’t buying any surprise problems that a previous owner maybe hid from you. Buyers also won’t have to fork out transfer fees and deposits tend to be lower for off-plan units. Buying earlier can also mean that property value increases over time, making a case for substantial return on investment opportunity, van Embden explains. 

If a development has already been approved by a bank, a potential off-plan homebuyer may find it easier to obtain a bond from the same financial institution. Banks will also give preference to off-plan buyers who have received pre-approval. Buyers also won’t need to pay their bond until the unit is complete, giving them time adjust and plan their budgets before moving in.

“One of the most significant benefits of buying into a sectional title scheme is you’re only expected to start paying when the whole development, or your section, has been completed. This can be very valuable for buyers who are mindful of their budgets and want to have a clear view of how their bond payments could impact them once the development is complete,” said van Embden.

The Consumer Protection Act (CPA) protects buyers by giving them the right to ask the developer to fix any structures that don’t match the original plans, within three months of the request. A buyer is also within their CPA rights to request the repair of any roof leaks caused by poor workmanship for the first year after purchase. 

Good return on investment

For those looking to rent out their unit, a previously unoccupied property is often more attractive to prospective tenants. Value appreciation could also mean that an investor is able to charge a rental fee that matches or exceeds the bond payment.  

“An off-plan unit can appreciate considerably during the construction period, which means significant capital growth between the time you make the deposit and take ownership of the transfer,” said Van Embden.

One should also factor in construction setbacks that could shift completion dates out, said van Embden. With loan offers typically lasting between three to six months, a delay in development has the potential to affect a person’s ability to secure a bond. To prevent this, it’s important to get pre-approval to guarantee the necessary funds are there to secure a home loan when the time is right.

Since its establishment in 2014, Blok has developed urban apartments in Cape Town, around Sea Point, Green Point and other popular suburbs.

Leave a Reply

Your email address will not be published. Required fields are marked *