The top reasons to buy property in a new development

New property developments have become a topic of heated debate over the last few years. We have all heard the horror stories of property developers who have gone bust, leaving an inhospitable shell for the “would be owner” of a home. Although such incidents have been very damaging to financial institutions and property buyers alike, new property developments continue to thrive. Let’s look at some of the reasons why and what you can do to ensure that your purchase in a new property development is sound.

The Top Reasons:

  1. No legal fees and costs: A purchase in a new property development does not attract transfer duty (which is normally payable to SARS) and the developer will usually opt to pay all other legal fees and costs on your behalf. You should confirm this prior to making a purchase.
  2. Favorable Bank Valuation: Developers usually request a pre-valuation from all the major banks. This means that when you make a purchase, you know that the bank has already found value in the proposed property. You can ask the developer to see the pre-valuation certificates to verify this.
  3. Personalization: Many developers give you the opportunity to choose your own finishes. This is usually a selection of tiles, carpets, paint and sometimes kitchen layouts or colors. You have the opportunity to choose a home that suits your tastes.
  4. No Renovations: A brand new property requires no repairs and those funds can safely be used to purchase that dining room table or couch you always wanted.
  5. Return on investment: If the development you have bought in has sold out, then you have clearly identified a market where there is a demand for property. You can easily sell your unit after it has transferred into your name and make a handsome profit.
  6. Rental Returns: Due to the saving of legal fees and costs, it is usually possible to rent your unit out for a value which closely matches your monthly bond repayment.

It is important to note the difference between a sectional title and a full title property development, especially from a “safe investment” perspective. Full title developments require you to pay as they build which represents a major risk as stated in the first paragraph of this article. However, sectional title developments require the developer to produce a finished product (which you must sign for) before the bank will release any funds. This profound safety net means that you never have to take an unnecessary risk. The bottom line for developers: No House – No Pay ! If you would like assistance in finding a property in a new development, contact one of our expert property consultants at Chilli Property. We will be happy to guide you towards a safe and sound  property investment opportunity.