Buying an off-plan house, which refers to purchasing a property that is still under construction or has not yet been built, requires careful consideration to ensure a smooth and successful purchase. Here are some key points to keep in mind when buying an off-plan house:
1. Reputation of the Developer:
Research and assess the reputation of the developer responsible for the off-plan project. Look into their track record, experience, and credibility. Check their previous projects, reviews, and feedback from previous buyers. It’s important to choose a reputable developer with a good track record to minimize the risk of encountering issues during the construction and delivery process.
*Top Tip: Request a real estate agent to show you around a few of the top developments in the area, and during your visit make an effort to strike up conversations with residents.
2. Legal and Financial Due Diligence:
Conduct thorough legal and financial due diligence before committing to an off-plan purchase. Review the sales contract, terms and conditions, payment schedule, and any legal documentation related to the property. Seek professional legal advice to ensure that the purchase contract is fair, transparent, and protects your interests. Additionally, carefully review the financials, including the total cost, payment schedule, and any associated fees, taxes, or maintenance costs.
*Top Tip: All decent law firms in Hua Hin will give a free consultation regarding a property purchase in Hua Hin or Pranburi, this is something we will arrange for you when you buy through us.
3. Project Details and Specifications:
Review the project details and specifications provided by the developer, such as the floor plans, layout, design, materials, fixtures, and finishes. Understand what is included in the purchase and what is not. Clarify any doubts or questions you may have before committing to the purchase. Make sure that the property meets your requirements and expectations in terms of design, quality, and functionality.
*Top Tip: Also make it specific to the Thai climate – consider roof and ceiling insulation, damp coursing, solar set up, rain water collection, large covered outdoor living areas, etc.
4. Construction Timeline and Completion Date:
Understand the construction timeline and completion date provided by the developer. Off-plan properties may have varying construction timelines, and delays can occur due to various reasons such as weather conditions, permit issues, or unforeseen circumstances. Make sure you have a clear understanding of the expected completion date and any potential risks associated with construction delays.
*Top Tip: Many developers will offer a penalty if they deliver late, for example, a 1000 Baht per day fine. It is generally not seen as good form to enforce this if the late delivery is clearly not their fault, e.g. national supply chain issues, weather events, etc
5. Payment Schedule and Financing:
Review the payment schedule provided by the developer, including the deposit amount, installment payments, and final payment upon completion. Understand the financing options available to you and ensure that you can comfortably afford the payments as per the agreed schedule. It’s also advisable to have a contingency plan in case of unexpected financial changes or delays in completion.
*Top Tip: account for fluctuations in exchange rate if making payments from overseas.
6. Guarantees and Warranties:
Inquire about any guarantees or warranties provided by the developer, such as structural warranties, workmanship warranties, or defect liability periods. Understand the terms and conditions of these guarantees or warranties and ensure that they are legally binding and provide adequate protection for your investment.
*Top Tip: Don’t forget swimming pool warranty for structure and pump, etc.
7. Location and Amenities:
Evaluate the location of the off-plan property, taking into consideration factors such as accessibility, proximity to amenities, infrastructure, transportation, and potential for future development. Consider the surrounding neighborhood, facilities, and amenities that are important to you, such as schools, hospitals, shopping centers, and recreational areas.
*Top Tip: In Thailand, you never know what will happen on any empty block of land. If you are buying for the view, make sure the view will not be hampered by some unexpected construction at a later date. You can look into this by looking at the zoning in the area, for example a close-up mountain view will likely remain since it forbidden to build on mountains (in Prachuap Kiri Khan province).
8. Risks and Exit Strategy:
Understand the risks associated with buying an off-plan property, including potential delays in completion, changes in market conditions, or unforeseen events that may impact the project. Have a contingency plan and exit strategy in case the project does not proceed as planned, and understand the consequences and options available to you in such situations.
*Top Tip: “One of the first things to consider when buying a property, is selling it later on.”
9. Professional Advice:
Seek professional advice from qualified experts, such as real estate agents, lawyers, and financial advisors, to ensure that you make an informed decision and protect your interests throughout the off-plan buying process.
*Top Tip: In Thailand, freelance agents have no culpability, go for established offices with solid reputations.
10. Development utilities/HOA:
Check where the supply of water and electricity comes from and at what rate they are charged. Ideally in Thailand you want government standard water supply from PWA (Provincial Water Authority), and electricity from the PEA (Provincial Electrical Authority), charged at the standard government rate. However, expect to pay more in case the development has underground electricity, or is located in a highly elevated position where water supply is less straightforward. Check what the HOA (Home Owner Association)/common fee/maintenance fees are, and how they are charged, i.e. per square meter of land, or per plot/house. Check what is included (pool, garden, common areas, pest control, insurance, etc), and what would be additional. Check that the maintenance contract specifies how these costs may increase in the future, i.e. according to standard rate of inflation, etc.
*Top Tip: Compare the look and curb appeal of developments with no HOA fee, VS those that have one. You may be surprised!
Buying an off-plan house can be a rewarding investment opportunity, but it also comes with risks. It’s crucial to thoroughly research, understand the terms and conditions, and seek professional advice to mitigate risks and make an informed decision.
Please contact us for further information on new developments, custom builds, off-plan homes etc in Pranburi and Hua Hin.