Buying a property off-plan: is this a good plan?

As the name suggests, buying off-plan enables you to buy a property that has not been built yet. The purchase is based on the plans put forward by property developers. You pay in instalments in line with the progress of the work. To protect you, legislation has set out specific rules and formalities to be respected.

Unlike an ordinary sale, there is no sales agreement in off-plan purchases, but a preliminary agreement, known as the reservation agreement.

This reservation agreement creates obligations to be borne by each of the contracting parties. As the reserving purchaser, you must pay a security deposit, which may not exceed 2% of the provisional price. In exchange, the seller undertakes to reserve the property or part of the property for you. The funds will then be unavailable until the conclusion of the sales agreement.

On paper, buying off-plan only offers advantages. Not only do you benefit from legal protection, but you buy an asset that has a triple A energy performance, and that fully meets your expectations. You can choose the layout of your various rooms, equipment and the various aspects of the property. The sooner you enter into the sale, the more the property will be personalised. Early on, there is a greater range of choices, whether it is for the best exposed apartments, the most accessible parking spaces or the best placed cellars.

This flexibility can also be found in financing. Most banks allow you to repay the capital only once the property has been delivered. You can thus win on two fronts: generally, during the construction period, your monthly charge is reduced and the interest charges you pay may be tax deductible. At ING, paying the various invoices relating to the construction of the property is also as simple as a transfer. You release the funds from your home loan via the payment menu in your My ING application. Payments are executed in a few minutes, or within two working days for certain applications.

Buying off-plan requires imagination, time and a lot of energy. Although some developers have started to offer totally virtual visits, these are relatively new and are not always sufficient for you to put yourself in a property that currently only exists on a plan. But being cautious while being capable of taking decisions quickly is not easy, and could lead to bitter disappointment if you have favoured one over the other. You will also need to devote many hours to managing this project. Supervising the work and choosing the finishings, the kitchen, the furniture and the paints cannot be done in the blink of an eye. Ultimately, these choices will inevitably lead to discussions, or even disagreements, with your developer during the construction period. Knowing your rights and reading the plans and specifications carefully are essential in this regard. In certain cases, you will be able to make changes, but at an additional cost that could destabilise your budget.

Investing in an off-plan purchase also requires patience and a certain ability to adapt. Delivery times are often between 18 and 24 months, but delays can be expected, particularly in a period of uncertainty like the one we are currently experiencing with the public health crisis. Managing the move from your current home to your future property could thus be like a balancing act.

If the benefits seem to outweigh the constraints, then it’s time to get started, but don’t rush into anything! Use your common sense when you select your developer. Otherwise, you could expose yourself to serious disappointment. Check the contractor’s reputation by collecting opinions and testimonies from the people around you or online, and analysing the results on search engines after entering their name. Go and visit the buildings already built, and if necessary, ask to visit the apartments already completed.

Once you think you have found that rare gem, do not hesitate. The home of your dreams will soon be a reality.

Simulate your mortgage on ing.lu/immo

08/21