Top 6 things to remember when buying off-plan property
There’s nothing like getting in first if you want to snap up a bargain. And when it comes to real estate, you can’t be any earlier than buying a property before it’s built.
Off-plan is usually a great way of getting more for your buck – but it can be a minefield for the inexperienced. Here are top six things to remember before signing on the dotted line.
1. How much can you afford?
Never buy anything that you ultimately cannot afford.
2. Why are you buying?
Buying an off-plan property to move into yourself is a very different scenario to buying it as an investment for resale or to let. The reason behind your purchase will determine the type and the location of the property you should buy.
3. Know the developer and evaluate the project.
Do your due diligence on the developer behind the project. What have they built to date? Is the developer licensed by RERA? Were there any issues with previous projects? What’s their reputation like? Will they hand over the completed property in time? How does the project compare with similar projects in the same community?
4. Is any bank willing to back the off-plan project?
Understand the financing options offered by their preferred banks. Irrespective of whether the purchaser is a UAE national or non-UAE nationals, UAE Central Bank allows banks to only provide 50 percent of the financing for all off-plan properties. This is regardless of how many other properties the purchaser owns and whether the purchaser intends to be an owner-occupier of the off-plan property.
5. Know your rights:
Ask for the land title deed, escrow account number, DLD approvals and agreement with the contractor. There’s strong investor protection in place now, with RERA snuffing out risky speculation by introducing measures such as the developer having to pay 100 percent for the land and make a down payment of 20 percent as bank guarantee, deposit 20 percent in escrow account or complete 20 percent construction before selling off-plan.
6. Reselling an off-plan property is harder now than it was before 2008:
Most developers will permit resale only once the original buyer has paid off at least 40 percent of the property’s price. Emaar, for instance, restricts the resale of their off-plan units until handover. There are others that do not operate under such constraints, so depending on whether you’re looking to sell before completion or not, you should choose your developer accordingly.
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