Top 10 considerations when buying off-plan property

Having sourced, packaged and promoted buy-to-lets in over 20 countries, I believe I've got a reasonable knowledge of what to consider or what to ask developers when seeking a purchase.

Below are my top ten points:

1. Use a decent, local language speaking solicitor – The legal side of property investing is one of the most important areas to get right., particularly if you are buying abroad. Non-nationals can have an extremely difficult time getting justice if something goes wrong and they have not instructed correctly. If you are stuck on a country in particular e.g. Spain, get a Spanish speaking solicitor, perferably in your own country, who will be able to act well for you.

2. Title / Building permits – when asking for documentation from developers, ensure that the first things you get are the title deeds for the land the development is on and the building permits to build on that land from the relevant local authorities. Send these straight to your solicitor for confirmation. It will cost, but is one of the most re-assuring pieces of legal work you can do. There have been numerous stories in the press of developers building without planning permission or without actually owning the land at all! Ensure you are informed. As an aside, if a developer will not give you these documents you have ask why?

3. Evidence of comparable rental yields – if you need the rental yield to cover your mortgage and are being told the yield is 8% ask for evidence that this is the case locally. In the UK, there are a number of websites where you can compare areas. Overseas it can be more difficult, particularly in emerging markets, where values have not yet been settled upon. Get as much evidence as you can independently.

4. Where is the nearest.... - this is important whether you are buying city or holiday location wise. Capital growth is greatly affected by convenience. In the city, how close is the apartment to the nearest undergound, overground or major transport routes? How close to shops, entertainment? If it is a holiday location, how close to the beach? Shops? Airport?

5. What infrastructure improvements – capital growth is also generated by improvements in the area. In cities there may be an extension to railway lines, such as the various extensions to the London underground over the years. As soon as these are announced property prices start climbing. With regards holiday home locations, a new airport may be being built or a new route established.

6. Evidence of mortgage terms in principle – if you required funding, make sure you can get a decision in principle from the bank. Market conditions can, and do change, as we have seen recently. If you are serious about a purchase and funding, ensure you speak to the banks before you speak to developers.

7. Pay your deposit into a lawyers account and not straight to the developer - this provides you with extra security in case the developer gets into financial difficulty. A good number of developers now will allow the deposit to go into a lawyer's “escrow” account and only released to the developer when certain building stages are met.

8. Check the developer's track record find out how long the developer has been in business, what their financial status is and how many successful develpments they have completed historically. If possible, it is useful to go and visit a previous development to see what kind of quality have been produced.

9. Is there a good payment structure? - Although the current funding conditions have meant higher deposits, generally you want to find a “% deposit down, rest on completion” structure rather than stage payments. A confident developer will be happy to provide this.

10. Full cost breakdown – finally ensure you know all the costs applicable, particuarly from the developer. A typical off-plan period can last 18 months to 2 years, and abroad that can mean currency changes against Sterling. Ensure all costs the developer is asking are written in contract and cannot be changed.