What is the Difference Between Off the Plan and Construction? Borrowers Guide
Off the plan and construction are two distinct terms used in the real estate industry to describe different stages of property development. Understanding the difference between these terms is crucial for borrowers who are interested in purchasing a property. This borrower's guide will provide a detailed explanation of off the plan and construction, highlighting their key differences and considerations.
Off the Plan:
When a property is sold "off the plan," it means that the buyer is purchasing a property that has not been fully constructed yet. Instead, they are buying based on the plans, designs, and specifications provided by the developer. Off the plan purchases often occur in developments that are still in the pre-construction or early construction phase.
Key Features and Considerations:
1. Future Development: One of the main attractions of buying off the plan is the opportunity to secure a property in a development that is yet to be completed. Buyers can choose their preferred unit or apartment from the available options, often at a lower price compared to the market value at the time of completion.
2. Potential Capital Growth: Buying off the plan allows buyers to benefit from potential capital growth as the property is completed and the market value increases. This can be advantageous for investors looking to secure a property at a lower price with the potential for higher returns in the future.
3. Flexibility and Customization: Off the plan purchases often offer flexibility in selecting finishes, fixtures, and sometimes even layout options. Buyers may have the opportunity to customize certain aspects of the property to suit their preferences, adding a personal touch to their future home.
4. Risks and Delays: While there are benefits to buying off the plan, it's important to be aware of potential risks. Delays in construction, changes to the final product compared to the initial plans, or financial issues faced by the developer can occur. Buyers should thoroughly review the contract, understand the developer's reputation, and seek legal advice to mitigate these risks.
Construction:
Construction refers to the stage of property development where the physical construction of the property is taking place. At this stage, the developer has obtained the necessary permits and approvals, and the building process is underway.
Key Features and Considerations:
1. Immediate Completion: When purchasing a property under construction, buyers can expect a shorter waiting period compared to off the plan purchases. The completion timeline is usually specified by the developer, and buyers can anticipate moving into their new property within a specific timeframe.
2. Tangible Product: Unlike off the plan purchases, construction properties offer a tangible product that can be physically inspected before making a purchase decision. Buyers have the opportunity to visit the site, view model units (if available), and get a sense of the quality and craftsmanship of the construction.
3. Limited Customization: Unlike off the plan purchases, where customization options may be available, properties under construction often have predetermined designs and finishes. Buyers should carefully review the specifications provided by the developer to ensure they align with their preferences and requirements.
4. Pricing and Negotiation: Pricing for construction properties is typically based on the current market conditions, and buyers may have limited room for negotiation compared to off the plan purchases. However, there may still be opportunities to negotiate certain terms, such as payment schedules or upgrades.
In conclusion, the main difference between off the plan and construction properties lies in the stage of development. Off the plan purchases offer the opportunity to secure a property before completion, with potential capital growth and customization options. On the other hand, construction properties provide a tangible product with a shorter waiting period and fewer customization choices. Understanding these differences and carefully considering the benefits and risks associated with each option is crucial for borrowers when making informed decisions.
