Property buyers have several options available to them when purchasing certain developments in South Africa.
Traditionally, buyers had the option to purchase either a plot or a plot-and-plan but recently, another option known as a turnkey sale was introduced into the property market.
In this article, we explain the difference between plot-and-plan and turnkey sale agreements.
Simply put, a plot-and-plan purchase means that a buyer would purchase an empty plot, employ an architect to draw up plans, obtain a building quote from their chosen contractor, and submit all these to the bank for finance.
Once the bank has approved finance, the plot is transferred into the buyer’s name and enters into the building contract with their chosen builder.
The builder is paid out in stages by drawing either directly from the bank or from the buyer until the property is completed.
The following are benefits of plot-and-plan:
Despite these benefits, there are some cons to consider. These include:
Turnkey properties consist of a range of pre-designed homes with plans that have already been approved by the municipality. Having plans approved is one of the most technical parts of building a new home.
The buyer chooses the property they want to purchase and signs a contract to buy a completed home. The buyer still has the option to choose all the finishes for the home, from a range provided by the developer.
However, no changes to the plans can be made. In other words, the buyer agrees to purchase the property as is.
The following are benefits of a turnkey property:
Additionally, banks are generally happy to finance a turnkey home in the same way that they would for a completed, secondhand property.
The biggest benefit of turnkey properties is that the buyer does not have to deal with any of the stresses involved with building a brand-new home.
Building a home is one of the biggest milestones for anyone to reach but understanding what it entails is crucial.
For assistance with understanding the legalities around plot-and-plan versus turnkey properties, feel free to contact our attorneys.
We specialize in property law and can guide you through the process.
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