Should I buy an off-plan property in Spain?

The pandemic made finding a bigger property with larger terraces and more services, a priority for many homeowners. Recent trends of the Real Estate Market in Spain indicate that the desire for bigger properties with outdoor spaces increased during 2021. However, properties with a large surface area and beautiful landscape like a Villa in Marbella might not be the most affordable option for everyone. What few buyers may know is that off-plan properties offer a cheaper alternative to a resale property.

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An off-plan property cuts down the cost for investors and potential homebuyers by approximately 15% compared to the costs of refurbishments and maintenance of an older property.

What is an off-plan property?

An off-plan property is a pre-construction property homeowners and real estate investors can purchase at a lower cost. These cheaper properties are just blueprints and they have not been built yet. For investors, the appeal in purchasing off-plan properties is the lower price point and the potential for capital gain.

How do I buy an off-plan property?

Buying off-plan is a popular purchase among real estate investors and homebuyers. When developers show buyers the fully drawn-up blueprint and approved plans, buyers feel more secure about their purchase. Blueprints and plans allow buyers to see how the building will look when completed, they’ll know the plans are legal, and they get an opportunity to live in an up-and-coming area at a lower price.

Off-plan properties in Spain are purchased through the developer or a real estate agent. Once you decide on a property, you may sign a reservation contract to ensure you secure the property and a deposit is required to hold your spot. To protect yourself and your property, you should sign a down payment contract alongside your first down payment. And, as the house goes through construction, you will need to go through your payment cycle.

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Things to keep in mind before purchasing off-plan

One of the biggest selling points for off-plan properties is the lower price point, but the reduced cost comes with some increased risks. Your real estate agent will guide you through the process, but you should also, keep the following steps in mind.

1.   Get a Bank Guarantee

With any investment, it is possible to lose money, and agreeing to buy an off-plan property means the developers may run out of money before completion. After the 2014 economic crisis in Spain, banks now offer guarantees to protect the buyers and developers.

A bank guarantee protects your deposits in the instances that the property is not delivered on time, developers run out of money, or file bankruptcy.

Outbreaks sometimes result in financial issues and a bank guarantee protects buyers in the event of such unpredictable cases. However, a bank guarantee must be obtained for an individual property rather than all the developments to truly offer proper protection for your property.

2.   Know the Off-Plan Property Specs

Much like renting out a property, knowing the exact details of your property keeps both parties accountable. A detailed list helps buyers hold their developer accountable for the designs and developments they promised. It also protects developers from buyers who may hold unrealistic expectations of the property and requests outside the scope of the project. Review your contracts before signing and ensure the details and specifications about the off-plan property are listed.

3.   Access the quality of the surrounding area

As with regular buildings, the area around a property helps determines the value of the property: Normally, properties surrounded by amenities and green areas are more valuable than properties without. Ask the developer for the plans for the neighborhood and landscaping for your property.

A well-cared-for property is essential to enhancing the quality of life and living standards for the residents inside. Whether you are a home buyer or an investor, residents appreciate a well-designed outdoor space with greenery, and it gives a luxury feel to the property.

4.   Talk to the developer about deposits

The law states that all deposits must be secured with a bank guarantee following the approval for planning. Your developer should have all the legal paperwork and a record proving the land is registered to them. Directly contact the developer to confirm land ownership or look up the property at the Land Registry.

Certificates will provide information about the land, boundaries, and the planning situation with regards to restrictions, public footpaths, green zones, and other construction plans. A Cadastral certification helps you obtain information about the property, you can visit Cadastre in-person or find the certificates online at the Cadastre Website.

5.   Sign a contract

Signing a contract is the final step to secure the property. Do not sign a contract before everything else is in order. Your Real estate agent or lawyer will guide you through it. When you sign the contract, make sure it is detailed and contains the total balance and deadline for completion. Once the construction is done, you will receive a Finalisation Certificate from the developer and a license of First Occupancy proving the property is in livable condition. For extra protection, consider having a chartered surveyor checking the property.

If the completed property does not meet the specifications and details outlined in the plans or if your developer fails to complete on time, you are entitled to rescind the contract or extend the deadline and receive your deposits returned with interest. A lawyer is an optional step in this process.

Andalucia Realty offers new developments in Costa del Sol and Villas in Marbella for early adopters searching for quality homes at a good value. Browse through our wide range of off-plan developments in Spain to find your dream home,

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