Purchasing off Plan
Buying a not-yet-built property `off-plan' either through an agent or directly from a developer is a popular option as it often works out considerably cheaper than buying a finished property, sometimes up to 25% below the current market value.
Developments in Spain sell very quickly and there are normally a few price rises over the course of construction usually between 5 & 10% each time. You need to get in as early as possible preferably at first released prices, in order to maximise your profit.
The reason why buying off plan can be such a good investment is that you only pay approximately 30% of the purchase price as a deposit with the rest due on completion - the balance can be financed with a 70% mortgage.
Off- plan purchases have seen some spectacular returns over the last few years and the Spanish property market is still buoyant but you need to buy wisely in a good location and from a good developer.
It is essential that you get a good lawyer who will make vital checks and draw up a cast-iron contract to protect your money. You need to make sure that the developer has all the appropriate licenses, that they are the true owner of the land and that there are no mortgages attached to the land etc.
You also need to protect yourself for all eventualities such as the developer going bankrupt, failing to complete or completing late. Your lawyer will be able to incorporate various safeguards and penalty clauses into your sales contract.
It is also important not to be influenced by high-pressure sales techniques or to sign anything or pay a deposit straight away - go home and think about it and seek legal advice before you commit to any purchase.
We have developed our own strict criteria for off-plan purchases and will only work with developers we know have a proven track record, and will only recommend developments we believe offer a sound investment with attractive payment terms.
