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Buying Property Abroad
Liz Hodgkinson continues her series
No. 3 When you buy offplan
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Almost always, offplan developments are offered to early buyers
at discounted prices. The idea is that the earlier you buy, the
greater will be the potential profit when you come to sell. The way
it happens is that property investment companies negotiate bulk
discount prices from developers and builders, then offer these deals
to the general public. |
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The
earlier in the game you buy your particular hole in the ground,
the greater will be your capital gain, or profit, when you want to
sell. Or, at least, this is the idea, and the carrot held out to
potential investors. The reason these huge discounts can be offered
is because offplan property is ‘unrealised’ at the point of sale. In
other words, it is not really worth anything until the apartment or
villa is completed.
Clearly, there are serious potential risks to buying in this way
– that is, purely to make a profit – and a lot of research and care
is needed to be sure (a) that the development will be completed at
all; (b) that it will not be competing with other, similar and
cheaper properties when completed; (c) that the developer does not
go bust and all investments are wiped out, and (d) that local
currency rates remain favourable.
None of this can be known for certain in advance, so the best
advice is: proceed with caution! This includes: visiting the
development sites yourself, rather than relying on websites and
pictures; confirm that all the planning permissions are in place
and, very importantly, compare similar developments in similar
areas.
Experts always advise: be guided by knowledge rather than
emotions, when buying abroad. It is all too easy to be swayed by the
romanticism and excitement of it – and to forget the practical
realities.
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Liz Hodgkinson is a prolific author
and journalist contributing to many publications. She
has written over 40 books on a wide variety of topics
and has a background in national newspapers. She now
falls into the 'later-life' age category and in
recent years has started writing for this 'older'
market, and contributes to Saga magazine, among
others.
Liz has two sons and four grandchildren. She is
divorced and now lives in London and on the
South Coast. She has written three books on property
matters and her interests include snooping round
other people's houses and viewing showhomes.
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Beware of buying offplan property – however attractive the
discount sounds – if there is no planning permission for the
development, no building licence in existence, there are debts
attaching to the property and no habitation certificate when the
building is completed.
Also make sure that any property you buy in this fashion will
not be affected by landgrab – when the government intervenes forcibly,
and legally, to take the land back for itself with no compensation or
redress offered.
Certain areas in Spain have been affected by landgrab, leaving
many disaffected people who discover to their horror they are no
longer second-home owners, and not only their lovely home, but all
their investment is wiped out.
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