It all sounds so simple, far less trouble than worrying about damp rot, settlement and unscrupulous vendors. But at least the second-hand market is the devil we know. While we may rail against certain aspects of buying and selling, the property is there to be seen and we are familiar with the procedures and the role of estate agents, solicitors and surveyors. When it comes to buying off plan, though, the questions that need to be asked are very different.
The intense marketing of some new developments only serves to further cloud people's minds to the pertinent issues and Linda Beaney of Beaney Pearce, a firm of solicitors, has real concerns about how ill-prepared some buyers are. "They are likely to have spent more time on the small print of their holiday brochures," she says.
In London, particularly, the shortage of good property has fuelled the rush to buy off-plan. In a document for prospective buyers, Beaney Pearce runs through a list of how to proceed - sensibly.
Crucial is the warning not to be panicked into buying by the crush of people apparently making speedy transactions. It is necessary only to recall scenes at developments such as County Hall in London to know how a carefully orchestrated marketing campaign can create queues and a panic among potential buyers fearful of losing an apartment.
Buyers might even have exchanged contracts on the spot. The frenetic atmosphere can also persuade those who arrive at launches with their finances in place to overstretch themselves. Once the few well advertised and very attractively priced units go, it's on to normal prices.
"I have seen people spend pounds 20,000 more than they intended to, as though it were pounds 20," says Tom Marshall of Cluttons. In order to speed things along, buyers in larger developments will often find a panel of solicitors on site during the sales days.
While they are independent and no one is obliged to use them, their selling point is that they are familiar with the documentation.
"If a developer has a large parcel of land, say, it is important to push the solicitor on its use. He could be in a difficult position if he has already looked at the paperwork," says Linda Beaney. And the family solicitor may not be the answer either, if he or she is not familiar with purchasing off-plan.
At the Law Society, David McNeill recognises that for the panel of solicitors on a development, it is a lucrative business. "But if they have worked with a developer and know something they cannot pass on to a purchaser they must withdraw immediately. There must be no conflict of interest. The obvious advantages of using a panel solicitor are that they will be cheaper and faster because they are not starting from scratch."
David Foulser, a solicitor with Bretherton Price Elgoods, specialises in new developments and is only too aware of the pitfalls. "The minute a developer suggests using a certain solicitor you might say that is putting more pressure on the buyer."
A further pressure is the deadline set by developers, who will threaten to withdraw the property after that date. Two or three weeks is often not long enough to complete a search of the wider area and usually the contract is on a take it or leave it basis, explains Mr Foulser.
"What I consider grossly unfair is that despite all the fancy marketing, floor plans, and specifications, when the contracts arrive there is a clause which says the buyer cannot place any legal reliance on anything said to him by anyone other than the developer's solicitor. Plans and sales brochures are provided for information only. If you want to inspect the plans you might have to drive miles to the head office. Who is going to do that?" he asks.
One of David Foulser's clients recently refused to exchange when the developer's solicitor would not confirm a particular point. "It is madness. Most people would have caved in because they are desperate not to lose the property. Developers sell property on the terms they dictate."
In London, Point West, the converted air terminal in Cromwell Road that went through rocky times during the recession with buyers losing their deposits, is being sold heavily this weekend. Some 126 flats are for sale and the sales office confirms that a building society and solicitors will be available. Nobody, they say, will be pushed to use them. So why are they invited in by developers? Edward Lewis of FPD Savills says it is easier if the solicitors have approved the form of the contract and understand the issues. If they are potentially going to be instructed on some 25 per cent of sales they can work for a more competitive fee. "All the potential problems should have been ironed out."
That may well be the case. But it wouldn't do any harm for those buying off-plan to be as rigorous about the standards of their property investment as they are about their holiday hotel.Reuse content