Buying

Buying Off Plans

Buying a home off plans is very different from buying a second-hand home. If the property is not yet built, then you can't even view it so you are dependent on viewing the plans and a promise from the developer and agent. In this case, it's a good idea to check out previous developments that have been built by the developer to check that they are up to scratch.

If you are lucky enough, there will be a show unit available for viewing which will give you a good idea about the quality of the finish of your new home. However, it is more and more common that buyers are buying blindly based on a few images presented to them in a glossy brochure. In this case, it's important to remember that the brochure is only an indication of how the end product will look. The completed development may differ slightly in terms of location of properties and landscaping from what you imagined.

Only when you solicitor has received contracts which include plans and property specifications that you will really have a clear set of documents that you can rely.

As such, it's important to get a clear idea of what exactly you are buying from the outset. As this is not always easy - the development may be just a field at the time of purchase - it's important to try to get as much information as possible.

Here are a few pointers:

• Always visit the proposed site prior to purchase which will help to give you an idea of the environment and the surrounds of the development.
• Will there be a commercial element to the development or is it purely residential? You don't want to have to travel a couple of miles to get a pint of milk. Or do you? You also need to check out other services and amenities that will be provided as part of the development.
• Take a look at the area surround the development to establish the scope for future developments, transport routes and infrastructure.
• Visit the local planning office and inspect the plans. You can also check with the planning office if there are future developments planned for the area. The picturesque green area that your property will overlook may be a building site in a couple of years.
• Once your solicitor has received a contract of sale, inspect the details. Are the details what you expected? Are the dimensions of the property and surround correct? What type of finish is provided for? What is the position regarding services?
• You may wish to employ a surveyor or architect to check over the plans for you. They should also be able to advise you on whether you have enough power points, telephone points etc. and may suggest some modifications.
  If you have any queries, you should raise them with your solicitor immediately in order to get clarification.

There are normally a number of clauses in the agreement which include:

• The developer can deviate from plans/specifications. This is normally justified as they may need to use alternative materials. Be careful that you understand completely the deviations that are allowed. You don't want to move into a property that has no windows for example. So understand the extent of the deviations allowed. It should be noted that minor deviations do not detract from the value of the property.
• The developer may also seek to reserve the right to change the development layout. It's important to be aware of this.
• There may also be a clause that specifies that you cannnot object to further development.
• An additional clause can relate to the fact that you have no right to complain about disruption or noise levels during the completion of the development. This applies if you move in to your property prior to completion of the entire development.
• The purchase of an apartment from a new housing development also has it's potential drawbacks especially in relation to specifications relating to balconies so be wary of this. There may for example be a requirement not to expose laundry to the public on the balcony, or relate to the use of barbeques on balconies.
• It's also important to check your parking entitlement. Do you have a designated parking space or is it free parking for all residents? Do you have to pay for a designated space or is it included in the value of the property?

One bone of common contention is often the size of the garden. Plans may indicate a different size to the actual garden. There may be a clause in the contract to protect the developer in the event that this occurs so be clear on this.

Once you have paid a booking deposit, you are normally required to pay the remaining deposit usually within 3 weeks. This is usually up to 10% of the value of the property. So make sure that you have the appropriate finances in place.

The developer/builder to whom you are paying your deposit will in most cases be a limited liability company and this has its own inherent risks. Most new developments will have the benefit of being covered by the Home Bond or Premier Guarantee scheme. Most banks will insist upon this as a condition to your mortgage. This is a guarantee or bond which should protect your deposit and any stage payment should the unthinkable happen and the developer go bust.

Rather than you having to pursue your money from a company in liquidation, the bond or guarantee scheme will refund the payments made by you. These guarantees are subject to their own rules and regulations governing time and monetary limits. You should consult with your solicitor for complete details on this.

Stage Payments:
If you are making stage payments, the Irish Home Builders Association (IHBA) code of practice sets out percentages that interim payments should not exceed as follows:

• booking deposit 4 per cent
• contract deposit 11 per cent
• interim payment at joist-level 25 per cent
• interim payment at roof level 25 per cent
• Interim payment at internal plastering stage 25 per cent
• Completion payment 10 per cent

Again, make sure that you have the appropriate finances in place to cover these stage payments. If you don't, it could end up being a costly mistake on your part. You will not be able to mortgage the property until you own the property, so make sure you have appropriate savings, a loan or bridging loan in place. This is especially important if you are obtaining a 100% mortgage. You will need to make the appropriate arrangements with your lending institution regarding the release of funds.

While there are risks involved in purchasing from plans, it is only in a minority of cases that problems arise. If you are clear from the outset as to exactly what you are letting yourself in for, there shouldn't be a problem. The main problem that usually arises with new developments is that the completion date is rarely met. You need to be aware of this especially if you are trading up or ending a letting lease agreement. You don't want to end up homeless.

With the practice of buying from plans becomming more and more common, more regulations are being put in place to protect the purchaser. It's important to keep up to date with the progress of the development by visiting the site at regular intervals and keeping in touch with your estate agent. Your agent should be able to answer any queries you may have.