Off the Plan purchases: the risks and a possible solution

Recent media concerning a Council's Deputy Mayor's Development Company demonstrates the dangers of buying "Off the Plan" apartments.

Almost every Off the Plan contract provides the Vendor with flexibility to vary the plans for the units, including the areas of units. Almost invariably, the contract then gives the Purchaser the right to rescind if such variation is more than, say, 5% of the agreed area.

Here is what can happen:

1. Investors search tirelessly for a good Off the Plan investment unit and invest time and money on legal costs etc to secure a particular unit in a proposed development.
2. The buyer raises the 10% deposit, often incurring significant fees, using bank guarantees or deposit bonds or worse still, their own cash.