Buying off-plan means purchasing a property before it's built, based on plans, renders, and a show unit if one exists. It's an increasingly common option in and around East London, but it works quite differently to buying an existing home.
Why Buyers Consider Off-Plan
Off-plan purchases often come with a lower entry price than an equivalent finished home, since developers' price early units to secure funding and momentum for the project. Buyers also get a brand-new home with modern finishes, no immediate maintenance backlog, and sometimes the ability to select finishes within the developer's options.
There's also a practical financial upside worth understanding. Because you typically only pay the deposit upfront and settle the balance on registration, your money isn't fully committed until the unit is complete, which can work in your favour if property values in the area rise during the construction period.
Understanding the Payment Structure
Off-plan purchases typically require a deposit upfront, with the balance due on registration once the development is complete and transferred. Some developments require staged payments tied to construction milestones, so it's important to understand the specific payment schedule for the development you're considering, not assume it works the same as a standard bond.
Ask specifically what happens to your deposit while construction is underway. Reputable developers hold buyer deposits in a dedicated trust account, managed by a conveyancing attorney, rather than using the funds directly for construction costs. This detail matters more than almost anything else in the contract, since it's your primary protection if the development runs into financial difficulty.
Risks Worth Understanding
Construction delays are common in the industry and can push back your move-in date by months. It's also worth confirming the developer's track record on previous projects, since a development that stalls partway through construction can leave buyers in a difficult position. Request to see completed examples of the developer's previous work where possible.
It's also worth considering what happens if your own circumstances change during the construction period. Off-plan contracts are typically less flexible to exit than a standard resale purchase, since you're locked into the developer's timeline and terms rather than a straightforward two-party agreement.
What to Check Before Signing
Confirm the sectional title or homeowners' association rules that will apply once the development is complete, since these are set by the developer initially and buyers have limited ability to negotiate them. Also check what happens to your deposit if the development doesn't proceed, and whether it's held in a secure trust account as required by law.
Financing an Off-Plan Purchase
Banks generally require the development to reach a certain pre-sale threshold before approving bonds for individual units, and some banks are more conservative about off-plan lending than others. Engage a bond originator early to understand which lenders are actively financing the specific development you're interested in.
Off-plan versus buying an existing home
It's worth weighing the two options directly against each other rather than assuming off-plan is automatically the better financial move. An existing home lets you inspect exactly what you're buying, move in immediately, and negotiate more freely on price. Off-plan offers modern finishes and potential capital growth during construction, but comes with waiting time, less negotiating flexibility, and a degree of trust placed in the developer completing on time and to standard.
Frequently asked questions
How much deposit is typically required for an off-plan purchase? This varies by developer, but 10% to 20% of the purchase price is common, with the balance due on registration once the unit is complete and transferred.
What happens if the development is delayed? Most off-plan contracts include provisions for reasonable construction delays. Significant or repeated delays are worth discussing with your attorney, since remedies vary depending on the specific contract terms.
Can I sell an off-plan unit before it's registered in my name? This depends on the developer's contract terms. Some allow assignment of the purchase agreement before transfer, often subject to a fee or developer approval, while others don't permit it at all.
Is off-plan property a good investment? It can be, particularly if the area is growing and the development is well located, but it carries more uncertainty than an existing property with a proven sales history in the immediate area.
Considering a New Development?
Our agents can talk you through current off-plan opportunities in East London, including developer track record and realistic completion timelines, before you commit.
Browse new development listings or speak to a Bass Property Group agent.
