It is difficult to write a definitive buying guide which covers the buying process in all countries. However, there are some basis rules and terms which the first time purchasers will need to know.

Most purchasers buy off-plan property

This means that the property is not completely built. When a development is at the pre launch stage generally property investors will be buying at the lowest price. The earlier the reservation the better choice of position within the development or phase of the development, but the either no construction or very little construction will have proceeded.

Advantages of purchasing an Off Plan Property - The earlier your investment the greater choice of units, therefore enabling the best pick of the bunch, for example a sea view or beach front property. This will then enable you a better chance of resale at a higher price in the future, especially if the type of unit you choose is limited.

Risks of purchasing an Off Plan Property - The cheapest price can sometimes come with a risk that if the developer does not have a good track record, or is new to developing and doesn’t have the finance in place to complete the build, would therefore have to rely on a certain number of sales to complete the build.

This will be variable on each development. There will be a reservation fee when you reserve and it is crucial to ascertain whether it is refundable. The payment plan will give you the details of the stage payments so that you can budget for these.

After reservation the contracts are normally issued and the client has a number of days (usually about 28/30 days) to sign and pay their next payment**. The figure could be between 20%-40% if the development is at the ground clearing stage, or the build is just starting. If the build is further advanced the payment could be more.

Before signing and forwarding on a deposit it is advisable to take legal advice.

There are International Lawyers based in the UK, they do tend to be more expensive than the Lawyers based in the country of the development. But they are regulated by the UK Law Society. If you are living outside the UK, contact an International Lawyer in your own country or take advice on a reputable lawyer in the same country as your purchase.

This is usually an approximate date, but should be written in to the contract which the developer must adhere to – note if there are any penalty clauses if the build is later than scheduled.

LTV – Loan to value. This will be a percentage of the purchase price. E.g. 70% LTV on a property price of £100,000 this would be a deposit of £30,000 and mortgage of £70,000.

Purchasers should ascertain whether the developer will require draw downs to cover the stage payments or the 70% upon completion.

These are accounts where deposits, reservation fees, stage payments are paid into an Independent bank account other than the developers. These are normally Clients accounts held by Lawyers who are responsible for the safe keeping of the money and the transfer of any funds to the developer at the appropriate time.

Please be aware that not all payments plan funds are paid into Escrow accounts.

Most developments are launched in phases. Units are released in small sections especially if the development has a large number of properties. Smaller developments may launch all the properties simultaneously.

Prices tend to rise as each phase is launched.

Most developments will have a pre-launch stage; this enables investor to purchase the best properties at the best prices. When developments are in the pre-launch stage some of the final information maybe subject to change, when this is the case the purchasers deposit is usually refundable for a certain amount of time or until further information is released.

Purchasers can request to see copies of planning permission and build permits. However they are usually not in English.

This is a chicken and egg situation. Agents and Brokers can be loathed to divulge who the developer is just in case a prospective purchaser goes directly to the developer to try and obtain a better price. Prices should be the same either from the Developer or the Agent. Agents have to sign a contract to sell units in developments and there is always a stipulation that the Agent is not allowed to offer discounts unless these have been agreed by the Developer. Therefore, shopping around for a better price doesn’t necessarily work.

A purchaser will want to know the name of the development company so that they can check out a track record. If the Agent has a good relationship with the purchaser and the developer then they will be happy to issue this information.

Will there be a market to sell your property on to? There are certain factors which allow for a better exit strategy:-

These will be for a specified period of time, a percentage of the price a purchaser paid for their property. The guaranteed percentage will either be net or gross. Net will be the amount the purchaser will receive. Gross will have deductions for maintenance and any other charges. An INDEX LINKED rental return means that your return will be a percentage of the value of the property; the property will be re-valued at certain points in time. For example if a property was purchased at £100,000 and the following year it was valued at £110,000 the percentage would be on £110,000 the following year and so on.

These are usually for a longer period of time and client receives their VAT back approximately 6 months after completion. At the present time this is 19.6% of the purchase price. There is a law in France that if the developer wants to renew the leaseback for a further period of time they are allowed to do this. Therefore, if you are requiring a property for personal usage after an initial leaseback contract please bear this in mind.

This will vary but could include lawyer’s fees, notary fees, stamp duty and any other local taxes, it is important to find out exactly how much the closing costs will be so you can work them in to your budget.

Brokers/Agents are not tax experts it is therefore the responsibility of purchaser to do their own due diligence on Capital Gains Tax, Rental Tax etc. Of course we can usually give a rough guide.