# Buying off the plan



## HardyQ (Apr 24, 2018)

We are a retired couple looking to move to Murcia region as soon as our own house sale completes. We have visited Spain several times, though not then looking at property.

I understand that nothing beats on the ground research and we will spend some months at least in Spain before we buy anywhere.

In the meantime, we are very taken with a development of apartments that look just right for us, but are nervous about getting too involved with 'buying off a plan' when there is no sign of anything on the ground yet, as far as I can tell. 

We will visit the location in a few months time and hope to find out more then.

But as a starting point, could anyone suggest to me the sort of questions I should be asking the developer that would show that this is a genuine development with appropriate approvals etc - so I don't just waste too much time getting excited about something that might not happen!

This is my first posting, and I'd appreciate all the advice I can get - thanks.

HardyQ


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## Swerve (Jun 29, 2011)

This is from a UK source. 
Don't know how much applies to Spanish off plan. But it's a start. 

1. How much are the reservation fee and deposit?
The reservation fee is the amount you pay to reserve your new build. This is between £500 and £2,000. The next payment you’ll make is the deposit: usually around 10% of the final price.

2. How secure is my deposit?
Your deposit will be paid to the developer's solicitor, but they should hold it in a separate client account. Depending on the contract for sales and purchase the deposit may be releasable or be held with the solicitor. Generally, only the first 10% of the deposit is protected by schemes such as NHBC, LABC etc. It helps to protect you should anything go wrong. Your solicitor should check that this is the case, too.

If your deposit is going to be more than 10% then your solicitor should check that there is additional coverage of the deposit or that you are aware of the risks.

3. Will the layout be identical to the ‘showcase’ property?
Most developers will have a model property to illustrate the build, as well as provide brochures and plans to describe the off-plan property you’re buying. Ask how your property differs to the model, and if the finishes (fixtures, fittings, and décor, for example) are identical. One of the advantages of buying property off-plan is that you’ll have some leeway to negotiate and personalise the finished product.

4. When will the property be completed?
Of course, you’ll want to know when the property will be completed and ready to let. However, you should also ask if there are any clauses that penalise the developer for late completion. There should be a clause that gives you the option to walk away (and have your deposit returned) should the developer not complete when it says it will.

5. What happens if the property market falters and house prices fall?
This is something that is out of the hands of the developer. Once you’ve paid your deposit and the ball is rolling, you’re obligated to complete (providing the developer sticks to its side of the bargain).

Interest rate rises and property price falls are part of the cycle of property prices. You should take advantage of the benefits of using a buy-to-let mortgage broker broker, who will be able to get you the best deal for your individual circumstances and investment objectives.

6. What is included in the price?
Always make sure you know what is included in the price. The fixtures, fittings, furnishings, and white goods are shown in the developer’s glossy sales brochure often include upgraded items. Make sure that a parking space is included if advertised. Ask about rental guarantees, too


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## Simon22 (May 22, 2015)

HardyQ said:


> We are a retired couple looking to move to Murcia region as soon as our own house sale completes. We have visited Spain several times, though not then looking at property.
> 
> I understand that nothing beats on the ground research and we will spend some months at least in Spain before we buy anywhere.
> 
> ...


If you'd like to post a link to them I have some friends in the area I could ask for details. Either reply or PM.


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## mrypg9 (Apr 26, 2008)

I have no idea how usual it is to buy something that isn't even a hole in the ground in the UK but I wouldn't for one second imagine that doing so in the UK would be comparable to doing so in Spain. Courts are clogged with cases of off-plan developments that stayed off-plan with bankrupt developers unable to refund purchasers.

Basically, buying off-plan means you and others are handing over cash to a promoter/developer who for whatever reason hasn't the funds to start the development. If I need a builder or any workman to do a job that requires materials I never pay upfront. A company/self-employed person with a sound credit rating will have a supplier who has confidence and will supply whatever is needed. What guarantee do you have that the developer has access to secure funding? Or can/will reimburse you if anything goes wrong or if not enough people sign up to enable the development to go ahead?

Of course not all off-plan developments are doomed. But you can't possibly know if this apartment is right for you until you see it and inspect it. How do you know if all the promised facilities will materialise, the landscaping, the pool, water and electricity even?

I admit to being ultra-risk adverse....but surely there must be other apartments that suit your requirements that actually exist so you can see what you're paying for..

Just my opinion.


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## booksurfer (Apr 21, 2018)

mrypg9 said:


> I admit to being ultra-risk adverse....but surely there must be other apartments that suit your requirements that actually exist so you can see what you're paying for..)


I couldn't agree more.

I struggle to get my head round why anyone would want to buy off plan given the scams, cons and problems associated with buying this way in Spain in the past. Not to mention your excellent point about not knowing what you're getting.

It would have more traction if, and only if, the Spanish property market was in under-supply and demand was outstripping supply as it has been in the distant past but that is not the market environment at the moment which is very much in over-supply. 

There's been some signs of recovery in the Spanish property market and prices and homes are selling again but nothing like the kind of increases in price that we've seen in the past to make buying off plan necessary.


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## booksurfer (Apr 21, 2018)

I strongly advise you to have a read through some of the articles on this Spanish property website to familiarise yourself with the current Spanish property market. The site is written by an English guy living in Barcelona who is a properly analyst and has been my go-to site for many years in understanding the current Spanish property trends.

Pay particular attention to these two articles on buying off plan:

Legal Guide to Buying Off-Plan Property in Spain

MARKET HISTORY: Off-plan property boom was like a Ponzi scheme that lulled buyers into false sense of security


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## baldilocks (Mar 7, 2010)

booksurfer said:


> I strongly advise you to have a read through some of the articles on this Spanish property website to familiarise yourself with the current Spanish property market. *The site is written by an English guy living in Barcelona who is a properly analyst *and has been my go-to site for many years in understanding the current Spanish property trends.


Just how does that make any of his opinions worth more than any other? That could just be like using a British builder because he is British when one has no idea of what his building skills, if he has any, are like.


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## booksurfer (Apr 21, 2018)

baldilocks said:


> Just how does that make any of his opinions worth more than any other?


It doesn't. At least no more than what you might read in a newspaper and take at face value. Anyone with any sense checks the facts of what they read in a newspaper, they don't simply accept it for what is and because it's printed in a newspaper.

Likewise that site, you don't just accept what they write, you check the facts. Having done so a number of times you start to trust the information they give.

You're quite right to question it. No-one should take information at face value without fact checking.


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## HardyQ (Apr 24, 2018)

Thank you to everyone who responded to my first posting on the forum.

I was astonished at how many people took the trouble to offer their advice.

And every one of those postings contained information which will be valuable to me!

Responding to each poster briefly:

Thank you *Swerve* for so many useful points.

Yes *Simon22* - I would value getting in touch with your friends in the Murcia area. (Being new to this, I’m not sure what PM means).

*mrypg9* – I understand your reservations about whether this one apartment that has turned our heads is necessarily unique, and your posting has given us pause. Thank you.

I have followed up the links which *booksurfer* suggested, and found it very much apposite to my original query. Thank you very much for that valuable posting.

By the way, apropos *baldilocks* and *booksurfer’s* chat about the articles he had recommended, I had read the reference to the author being an English property analyst living in Barcelona as just a bit of accompanying info. The significant factor was that booksurfer was prepared to recommend his site.

Of course, I agree with the sentiments of both posters that the measure of the value of anyone’s opinions lies in the experience and judgment underpinning them - not in the author’s ethnicity. Having said that – I was very impressed by the recommended articles, and will dive deeper into that site.

What a terrific forum this is! Thank you all again.

HardyQ


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## Isobella (Oct 16, 2014)

mrypg9 said:


> I have no idea how usual it is to buy something that isn't even a hole in the ground in the UK but I wouldn't for one second imagine that doing so in the UK would be comparable to doing so in Spain. Courts are clogged with cases of off-plan developments that stayed off-plan with bankrupt developers unable to refund purchasers.
> 
> Basically, buying off-plan means you and others are handing over cash to a promoter/developer who for whatever reason hasn't the funds to start the development. If I need a builder or any workman to do a job that requires materials I never pay upfront. A company/self-employed person with a sound credit rating will have a supplier who has confidence and will supply whatever is needed. What guarantee do you have that the developer has access to secure funding? Or can/will reimburse you if anything goes wrong or if not enough people sign up to enable the development to go ahead?
> 
> ...


Yes there have been lots of horror stories over the years. Some were taking deposits even though they hadn't received planning permission. The deposits are high in Spain too, around 30% of the purchase price, a lot to lose. I have a friend who lost her deposit in 2005 plus legal fees spent but has not got any amount back and it is unlikely they will now.

It is easy to get swayed by fancy brochures and computer mock ups. Everything is described as "luxury" when sometimes they turn out to be cheap kitchen fittings etc. There are plenty of problem free good properties on the market. I once bought off plan in UK and regretted it even though I did get the finished product.


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## mrypg9 (Apr 26, 2008)

HardyQ said:


> Thank you to everyone who responded to my first posting on the forum.
> 
> 
> 
> ...


Point is, it isn't an apartment. It's a concept. A plan. Nothing more.


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## mrypg9 (Apr 26, 2008)

Isobella said:


> Yes there have been lots of horror stories over the years. Some were taking deposits even though they hadn't received planning permission. The deposits are high in Spain too, around 30% of the purchase price, a lot to lose. I have a friend who lost her deposit in 2005 plus legal fees spent but has not got any amount back and it is unlikely they will now.
> 
> It is easy to get swayed by fancy brochures and computer mock ups. Everything is described as "luxury" when sometimes they turn out to be cheap kitchen fittings etc. There are plenty of problem free good properties on the market. I once bought off plan in UK and regretted it even though I did get the finished product.



I'm remembering the development by the river where we used to walk Azor. Prices started out at around 275000 euros for a two bed two bath and month by month discounts appeared on their billboard advertising these 'luxury apartments' (situated a km and downwind from a goat farm and the sewerage works).
Eventually the sign read 'Diganos el precio!!!'.
Not sure how many pisos were sold but there were problems with electricity and water supply.


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## HardyQ (Apr 24, 2018)

mrypg9 said:


> Point is, it isn't an apartment. It's a concept. A plan. Nothing more.


Yes. Got it! Thanks!!


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## tarot650 (Sep 30, 2007)

We know people who bought off plan and never regretted it and we know people who bought off plan who are still fighting to get their money back as they never got chance to set foot through the front door.This video I put up on Youtube was for a development which was supposed to be 2 apartment blocks.We actually know a Spanish couple who bought one for their son which they regretted dearly.The pictures are all the houses that were built illegally just an absolute eyesore.The Youtube video was ripped from the promotion DVD that they were giving out at the time.


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## Isobella (Oct 16, 2014)

Good example Tarot. One fraud in the Spanish news today. 5 arrested for 500,000€ fraud selling fake properties.

Cinco detenidos en Marbella por estafar más de medio millón de euros con falsas promociones de viviendas | Diario Sur


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## sebastianredondo (May 17, 2018)

ask for the qualities of the materials, for the kitchen and bathroom furniture that comes as standard, for the closing of the sales, for the type of floor, for the distribution of the plugs ... ask for a plan of the house with all this kind of details and make corrections and suggestions about what you see that does not make sense.
if they offer you extra, distrust, they only have a price much higher than the market price.


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