Off-plan means buying a unit before it is built, usually at a lower price and on a payment plan. For first-time investors, the appeal is clear: a smaller deposit, time to pay and the chance that the unit's value rises by completion. The risk is also clear: you pay for something that does not yet exist, and some projects stall or never finish. This guide explains how to reduce that risk.

Understand what you are buying

With an off-plan purchase you sign a sale agreement for a unit in a building that will be completed later. The agreement should describe the unit by number, size, floor, finishes and the common amenities, and attach the approved drawings. It should give a completion date and say what compensation applies if the developer is late.

Check the developer

  1. Track record. Visit earlier projects. Ask owners if they received titles, whether service charges are reasonable and how defects were handled.
  2. Registration. Check the company at the Registrar of Companies, and the directors.
  3. Finances. A reputable developer can show how the project is funded and whether a bank is financing it.
  4. Reviews and complaints. Search for disputes, court cases or news reports.

Check the land and approvals

Do a full due diligence on the land, as set out in the land due diligence checklist: official search, ownership, charges and use. Ask to see the building approvals from the county, the NEMA approval where needed and the architect's and engineer's certificates. If the land is mortgaged to a bank, the bank must release your unit when you complete, so the agreement should require the developer to deliver a discharge or a title free of charges.

Protect your payments

  • Pay into an escrow or advocate's client account, not a personal account. Ask for the account details in the agreement.
  • Match payments to construction stages, such as foundation, slab, roof and finishes, rather than paying most of the price upfront.
  • Get a receipt for every payment and keep the bank evidence.
  • Insist on a refund clause with interest if the project is not completed by a long-stop date.

The title

Ask how and when you will receive a title. In apartments this is a sectional title, and in gated communities it may be an individual title carved from a larger parcel. Subdivision and titling can take years, so ask for a written timeline and what happens if it is delayed. Also read service charge, sinking funds and apartment ownership to understand the running costs.

Costs beyond the price

Add stamp duty, legal fees, valuation, registration, and any VAT. Sales of commercial property can attract VAT, so check the agreement to see whether the price is VAT-inclusive. Stamp duty is paid on transfer: see stamp duty on property transfers. Use the costs of buying property checklist and the loan affordability checker to see what you can afford.

Tax when you complete

If you plan to let the unit, the rent is taxable. Monthly Rental Income tax at 7.5% applies to residential rent within the limits, as explained in monthly rental income tax. If you sell before or after completion, any gain is subject to capital gains tax at 15%, which you can estimate with the capital gains tax calculator. Selling your rights before completion can also be a taxable disposal, so keep records.

Test the investment

Estimate rent, service charge, vacancy and loan costs with the rental property investment analyser and compare with the yield on a completed unit: see rental yield explained. If the numbers only work with optimistic rent or fast appreciation, walk away.

Red flags

  • A price much lower than similar projects
  • Pressure to pay a large deposit before documents are shared
  • Payments to a personal or unrelated account
  • No approvals or a refusal to show the title
  • A completion date that keeps moving

Frequently asked questions

Can I get a mortgage on an off-plan unit? Some banks lend against approved projects in stages, but many require the unit to be completed. Ask your bank early.

What if the developer goes bankrupt? Your protection depends on the agreement and where your payments were held. Escrow and stage payments reduce the loss.

Can I resell before completion? Possibly, if the agreement allows assignment and the developer consents. Any gain may be taxable.

Is off-plan always cheaper? Usually the entry price is lower, but delays and extra costs can erase the saving.