BUYING OFF-PLAN PROPERTIES
By: Magna Carta Law Office
“Off plan” purchase is the purchase of a property which has not been built yet or that does not actually exist or is currently under construction at the time the contract is signed, and the decision to buy is made with only the location and proposed building plans are available for assessment.
- Most property developers offer very attractive payment terms allowing you to pay a small deposit which may be settled in several flexible terms and the balance does not need to be paid until the property has been built which provides buyers with time to plan their finances.
- Buyers who purchases in the early phase of a development can have the opportunity to choose the best units which, in time, offer highest capital appreciation, and will also generate the greatest rental incomes.
- The prices of off-plan properties are usually very competitive and can be locked at the market price as of the contract date. Properties appreciate in value between the period of buying to the date the project is completed. Properties purchased closer to completion will be more expensive than those purchased early because as the demand rises and more units are sold, the prices of all the remaining units also increases.
- Buying a property that you cannot physically see or inspect is already a significant risk. This means that you will not know the appearance and quality until the construction is finished.
- Project delays or the developer goes bankrupt before completion creating a possibility that the project and contract could be cancelled. Some property developers do not have their own funds but instead sources fund from the buyers and other financial institutions.
- Sometimes a developer may not have received pre-approval. The design or dimensions of the property may change to achieve EIA and committee approval.
- It is possible that after the property has been constructed, the valuation of the property may be worth less than what you paid for.
Legal advice must be obtained before signing any document or paying any money. Due Diligence significantly helps to reduce the risks involved in buying off-plan properties as it is a useful tool for estimating the status of a prospective project and the developer. It is essential to be aware of any pending or potential legal action involving the property and to make sure that the developer has all of the required permits and legal documentations for the project. The need for thorough due diligence is recommended prior to the signing of a binding contract.
It is recommended that you have a lawyer in Thailand to review the contract drafted by the seller to ensure it is prepared with proper terms and conditions that meets the standard terms as required by relevant laws and confirm that the contract does not contain terms of any hidden cost and drawbacks.