A risky business

Some people have done well out of off-the-plan property, where buyers are shown plans and sign up to buy before the property is built.

The theory goes that you get the property at a discount for signing up and handing over a deposit before building begins. When it's finally built, you sell it for a profit.

It's just not that simple. Off-the-plan houses and apartments have RISK written all over them and many buyers fail to realise this.

The risks are greater when you're buying into a multi-unit development like an apartment building, but they're still there for off-the-plan standalone housing as well.

Some of those risks include:

• the property goes down in value before you receive possession
• you buy on the basis of an inflated valuation
• the developer doesn't complete the development - or wants more money
• you get caught by financing fish-hooks
• the contract favours the developer not the buyer
• the developer uses enticements of various kinds such as guaranteed rents.