The property column

Buying Property Abroad Liz Hodgkinson continues her series   No. 3 When you buy offplan

Almost always, offplan developments are offered to early buyers at discounted prices. The idea is that the earlier you buy, the greater will be the potential profit when you come to sell. The way it happens is that property investment companies negotiate bulk discount prices from developers and builders, then offer these deals to the general public.

The earlier in the game you buy your particular hole in the ground, the greater will be your capital gain, or profit, when you want to sell. Or, at least, this is the idea, and the carrot held out to potential investors. The reason these huge discounts can be offered is because offplan property is ‘unrealised’ at the point of sale. In other words, it is not really worth anything until the apartment or villa is completed.

Clearly, there are serious potential risks to buying in this way – that is, purely to make a profit – and a lot of research and care is needed to be sure (a) that the development will be completed at all; (b) that it will not be competing with other, similar and cheaper properties when completed; (c) that the developer does not go bust and all investments are wiped out, and (d) that local currency rates remain favourable.

 
None of this can be known for certain in advance, so the best advice is: proceed with caution! This includes: visiting the development sites yourself, rather than relying on websites and pictures; confirm that all the planning permissions are in place and, very importantly, compare similar developments in similar areas.

Experts always advise: be guided by knowledge rather than emotions, when buying abroad. It is all too easy to be swayed by the romanticism and excitement of it – and to forget the practical realities.

Liz Hodgkinson is a prolific author and journalist contributing to many publications. She has written over 40 books on a wide variety of topics and has a background in national newspapers. She now falls into the 'later-life' age category and in recent years has started writing for this 'older' market, and contributes to Saga magazine, among others.

Liz has two sons and four grandchildren. She is divorced and now lives in London and on the South Coast. She has written three books on property matters and her interests include snooping round other people's houses and viewing showhomes.

Beware of buying offplan property – however attractive the discount sounds – if there is no planning permission for the development, no building licence in existence, there are debts attaching to the property and no habitation certificate when the building is completed.

Also make sure that any property you buy in this fashion will not be affected by landgrab – when the government intervenes forcibly, and legally, to take the land back for itself with no compensation or redress offered.

Certain areas in Spain have been affected by landgrab, leaving many disaffected people who discover to their horror they are no longer second-home owners, and not only their lovely home, but all their investment is wiped out.