Buying a newbuild off the plan could protect you from future increases in the property market. This is because you agree on a purchase price with the developer at the current market prices but only have to pay when the property is ready for you to move into – which in some cases could be a year away. However, it has become common for build contracts to have escalation clauses that allow a developer to increase the price due to say supply chain issues or increases in the cost of building supplies. This could result in you having to pay tens of thousands of dollars more for the property. Although you may have the right to get out of the contract, you may find that the property market has increased so much that it does not justify you buying another property. Also, some build contracts are independent to the land contract and if you cancel the build contract you are still stuck with the land – and you will have to find yourself another builder.
For these reasons it is always important to consult with your lawyer before entering into a contract to buy a newbuild. For more information on this or any other legal issues you can contact Kemp Barristers & Solicitors at info@kempsolicitors.co.nz or 412-6000
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