New Developments: Yay or Nay?
Is it wise to buy property in new developments?
So, you spotted a new development in a suburb you like and are skeptical about whether you should invest in it or not. With more and more buyers entering the property market, it has seen a scarcity of existing housing in stock. These new developments that feature a range of options, from upmarket estates and premium-view apartments to affordable first time buys, have helped fill the gap.
On average, the properties in new developments tend to be more affordable than an established home, this is sometimes seen as a great option for first-time buyers. One can make valuable savings as you pay less VAT (since the price is structured better) and the payment of transfer duties are not applicable for new developments.
Many have shown a preference in these types of properties, so would it be wise to invest in new developments? With this in mind we have a combined a list of various pro’s and con’s for you to consider before making the big decision.
- It is affordable
Investing in a new development is an affordable and convenient option for first-time buyers who want to invest in property, but find themselves priced out of the market because of the high interest rates and property prices. For experienced property buyers, it could also be a boon, as you can get the finishing items like fittings and fixtures to your taste. Sometimes you also have some control over other elements in the build.
- No transfer duties and less VAT
Although you will be paying no transfer duties you will have to pay Value Added Tax (VAT), as the home will be registered in the name of the development company, so it is subject to the tax levied of immovable property. You will still pay less than what you would have paid on an existing property.
- No maintenance… for now
Besides the financial aspect, as this is a newly built development you might not be required to spend time on maintenance for the first few years. No nasty surprises like a burst geyser, faulty electrics or broken gutters should await you for now.
- Finished product is not what you expected
The plans that you initially saw may be different to the finished building. When buying off-plan you are just shown an artist’s depiction of what the property might look like, so the finished product might look a little different and this could also affect your original views.
- Lack of Space
New complex developments usually lack space due to the limited amount of land contracted for the development. Sometimes these new homes are built on smaller lots than older homes, so if it is a huge backyard that you were after, then investing in a new development might not be such a good idea.
- Building defects
As much as you don’t have to spend much time on maintenance when it comes to a new development, the threat of building defects also need to be taken into account. These include the structural soundness of walls, plumbing defects, cracks in tiles etc.
Before you buy into a new development, research the developer and their past builds. Read reviews of people that stay in those developments, especially with regards to how the developer responded to any structural or maintenance issues. What’s also been a growing trend is that most of these developments have their own Facebook Groups or community pages. Joining their pages prior to making the investment, will also give you an idea as to what it would be like to live there, should you make the plunge.