Over the past 10–15 years we have witnessed the emergence of selling property off the plan. This means that the purchaser enters into a contract of sale to purchase a property prior to the property being built. Settlement will normally occur 7–14 days after completion of the property, once the occupancy certificate has been granted by the local authority.

Selling by this method is used predominantly for units in multi-level developments and was initially used as a way for developers to obtain the promises to buy which were needed to satisfy the bank providing construction funds.  In the past only 25 – 30% of a development were sold in this way, usually at the price of the day rather than an anticipated future value.

These days such developments are often completely sold out before construction begins, with developers forecasting a future price While most of these have anticipated completion times of one to three years, some can have completion times of up to five years which can make them a high risk option where future value is being forecast.

The next few topics look at how each of the four options for paying a deposit applies to the investor buying off-the-plan.