It can be hard for first-time purchasers of off-the-plan property to grasp the concept of buying a property that doesn't exist yet.
The reality is, when you buy something off the plans, you're essentially just buying a concept.
For this reason, people want to know exactly when they can expect to see the property they purchased.
Most townhouse developers will give a rough estimate at the beginning of the process as to when they expect the development to be done. In some cases, the estimate is as broad as Q1 2024 for example, or it could be month specific, but you will seldom see developers telling you the exact date they expect practical completion.
In reality, no one knows exactly when the properties will be finished because there are too many factors that are out of anyone's control.
For example, numerous developments in Christchurch have recently been disrupted due to adverse weather which has delayed when concrete slaps can be poured and this has a flow-on effect for the rest of the development timeframe.
There is also council timeframes for issuing code of compliance and Land Information New Zealand (LINZ) time frames to consider when waiting on issue of title.
Developers will try their best to stick to their original build schedule but this isn't always possible.
In any case, it is in the developer's best interest to get the project build as efficiently as possible to reduce overrunning on costs and so they can collect the capital which allows them to move on to their next project.
Townhouses are usually much simpler to keep on top of when it comes to building progress because you are only dealing with one entity - the developer. When developing house & land packages, there is a higher level of complexity.
There are actually two parties involved when building house & land packages:
1. The land developer
2. The group home builder
The land developer is responsible for remediating the lands bound to be used as sections and making sure the Lots are all ready to be constructed on.
On the other hand, the group home builder is responsible for constructing the property which you have signed up to receive.
Before you can get an estimate on the completion of your dwelling, you first need to receive the land title which gives the group home builder the ability to build the house.
There should be a reasonable estimate of when the land title is due but this is also open to delays that are out of your control.
Once the land title is received, you can estimate the build will be completed within 6-9 months. However, the home builder will provide you with a more accurate timeframe once the foundations are laid for your Lot.
With a turnkey contract, you will need to get your finances in order about 2-3 months from estimated completion, but for a progress payment build, you will need to have your finances ready during the due diligence period because you will need to make loan payments during the build.
Throughout the build, you as the purchaser will receive build updates to let you know the progress that is happening on site and keep you updated with the latest estimated completion date.
Pre-settlement inspections are important so you can note any issues that need fixing
In the end, you will be invited in for a pre-settlement inspection where you get the opportunity to walk through your newly completed (or near completed) property and see the quality of the build and check for any defects.
When you approach the pre-settlement inspection time, it is recommended to get a building inspector who will have an expert eye for defects that if found, can then be resolved by the developer on your behalf.
Your contract will give you protection for this. So, if and when defects are found, the developer will be obliged to remedy them before settlement.
Patience is the name of the game when buying off the plan.
Just remember, you're still accumulating capital gains even when the property isn't built so don't worry if the build is delayed, as long as you're with a reputable developer, there is little to be worried about.