Buying ‘Off Plan’ means reserving a property on a new development is completed, often before construction has started. The developers are obviously very keen to sell as many properties as early as possible to minimise the risk to themselves and to obtain better interest rates on their development loans from banks and investors. To help sell the properties at this early stage the prices are normally extremely competitive, quite often lower than normal open market and because there is nothing to show potential purchasers except a floor plan and artists impressions of the finished development.

Off Plan purchases have seen some spectacular returns for hundreds of people over the last couple of years. One approach to buying Off Plan is to consider buying and selling before completion. Normally you only have to pay approximately 20%/30% of the purchase price as a deposit and then often nothing until completion of the property.

For example:

Purchase price €100,000 (July 2004)
Deposit payable € 30,000

Let us assume that you sell the property in October 2005 just before completion, and that you sell for 130,000 Euros (this is a much lower return than has been achieved on many developments in recent years). Your profit is E 30,000 which makes your actual return on cash invested 100%.

On 2 of our developments, Privilege Fort Beach and Panorama Fort Beach, you would pay a 10% deposit, a further 15% when the roof goes on and only 45% on completion with the balance not payable until 12 months after that!

One of the final benefits of selling before completion is that we understand there is no capital gains tax to be paid if you make a profit by selling before completion.

As always, however, you must take specific advice from a qualified accountant who will advise you fully having regard to your own particular circumstances.

Clearly without any risk, rewards are generally much lower, but in deciding to buy off plan in order to maximise the investment return investors need to be aware of the risks, including the possibility of fraud. Instructing local lawyers to act for you (we can arrange this) can substantially reduce the possibility of things going wrong and their knowledge of local businesses is invaluable in assessing the level of risk involved.

Click here for a quotation for local legal advice.

Click here to contact us.