So what are people buying in the current climate?

In the current climate, many would-be buyers have moved away from off-plan purchasing and are really more interested in ready-built properties. The current economic downturn has thrown up a number of issues for off-plan buying, most notably where developers have gone bust and/or have not been able to get financing, to finish off partly completed developments.

So this has meant that someone who has put down a deposit for a property that is complete, but where the rest of the development, or complex, is not complete, there is significant uncertainty as to how it will get finished. This could mean, the communal swimming pool remains out of service or un-built and shops/restaurants that may have been part of the grand plan, are no longer a reality. Or in some cases a property is not finished, but a deposit has been paid and little prospect of getting it back without costly legal action. Buyers with the bank guarantees have been protected more.

However, that is not to say that interest will not start to come back at some stage for off-plan property, particularly in places where there is a shortage of modern, newly-built property like Poland or Morocco for example.

Why go for new build?

There are many advantages of buying newly built property (different from Off-plan, where you are buying the right to buy a property once it is built). These range from: having input to the fixtures and fittings, low maintenance, latest technology may be used, in some instances a discount may be available if a developer is looking to shift the last few remaining units of a development, in order to move onto the next one.

There are some downsides. If a newly built property has been standing empty for a long while in a hot climate, like in Morocco for example, the décor can deteriorate in the heat. So it would be a good idea to check the condition of the apartment, if a long time has elapsed during the buying process and ensure the condition is as expected, before handing over final payments.

What to do when taking ownership of a new build property?

For snagging properties, generally speaking, a small proportion of the money should be either held back, or ensure work that needs to be carried out post inspection, is done prior to signing the final contract in front of a notary. This is fine if the issues are minor and can be sorted in a day or so, however things can be more complicated if the problems are bigger, like windows aren’t fitted correctly (sometimes a common problem in Poland) or the kitchen or bathroom needs repair work. This may mean re-scheduling another trip to re-inspect after agreed works are carried out, prior to signing the final contract.

Snagging is best carried out by the buyer in person, so they can also see what they are finally buying. I wouldn’t rely on the developer to do this, as the result will be biased. Once final monies have been paid, having signed off on snagging, there will be little recourse. Snagging can be delegated to someone you trust, with an eye for detail and if a comprehensive snagging list has been drawn up. Digital photos can be helpful to send through to a non-present buyer, although they don’t always show the level of detail required.

There are countries which offer the 10 year building guarantee, a bit like the NHBC guarantees here in the UK. In Morocco, for example there is La Garantie Décennale, the 10 year warranty, that is legally binding on the developer and which they are obliged to take out. This 10 year warranty covers two aspects of a building: the solidity of construction and the fitness for purpose.

Posted by Louise Reynolds
Property Venture^®

^{Posted 18th February '10} 

Property Venture^® is an independent, UK-based agent. We help time-strapped investors and holiday home purchasers, buy abroad by guiding through the buying process, so reducing the hassle. We visit the countries you buy in, so we can offer common-sense, grounded advice. Overseas members of NAEA. This means we have been subjected to the membership criteria and have signed up to follow the professional Code of Conduct established to help you, the potential buyer or investor, buy property with confidence