Property developments in South Africa are growing, and buying off-plan from these developments is becoming a popular choice.
This helps developers to finance the project, as having pre-approved sales allows them to obtain the necessary funding for the construction, and this form of purchasing can also save the purchaser money as transfer duty is not applicable.
“As with anything in life, there are some risks to be aware of when deciding to buy off-plan, but these risks decrease as construction nears completion. Therefore, the purchase price of units will usually be lower at the beginning of construction and then increase towards the end of construction.”The rule of thumb is: do your background work before committing to buying off-plan, Cliffe Dekker Hofmeyr said.
“The NHBRC holds all builders who register with them accountable and holds them to a wide range of requirements before they can commence building. One of these requirements is that a Certificate of Enrolment needs to be obtained before the foundations of the development are laid. “Should the builder be unable or unwilling to rectify the defects, the NHBRC can rectify them, following the completion of a complaint procedure by the purchaser.”The reality though is that most defects and signs of deterioration only make themselves apparent within a couple of years after the buildings have been constructed. What happens then?
Another pitfall is having the developer promise to complete the construction within a specified time period only to have that time pass without the purchaser being able to take occupation of their unit and construction still being far from completed, the firm said.
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