Squarefoot

Do Your Homework Before Buying an Off-plan Property

- Eric Tso Senior Vice President at mreferral Mortgage Brokerage Services

According to the latest data from mreferral Mortgage Brokerage Services and the Land Registry, there were 103,644 approved mortgages for completed properties in 2019, a 1.8% year-on-year decline; in contrast, 13,343 off-plan properties secured mortgages—not only is that a whopping 48.5% increase compared to 2018, but in fact the highest recorded number in history. Off-plan properties—meaning first-hand homes that are not yet completed—are hot commoditie­s these days, and with good reason; developers are eager to offload their new units to avoid paying the hefty vacancy tax, resulting in reasonable prices; meanwhile, the government’s new relaxed mortgage measures and low interest rates offered by banks have incentivis­ed homeseeker­s to enter the market. This year, 39 new developmen­ts will be launched, offering a combined total of some 18,300 units. With the popularity of off-plan properties likely to continue, I’m here to offer some insight and tips to prospectiv­e off-plan buyers.

First of all, do your due diligence before making a purchase decision. There are many things interested buyers can do ahead of the launch of the new developmen­t, which includes learning about details of the project on the developer’s website; checking for news related to the developmen­t; going to see the developmen­t yourself and getting a sense of its surroundin­gs and nearby infrastruc­ture, and since off-plan properties are uncomplete, make sure to check out the show flats. Developers usually provide two types of show flats—unmodified (with the same conditions of the actual flat to be handed over to buyers upon completion) and modified (partly furnished and decorated)—for the public and prospectiv­e buyers to see. Ask for a copy of the sales brochure before taking the tour, so you can have a better reference at hand as you examine the show flat.

Once you’re satisfied with what you’ve seen and decide to purchase the unit, the next step is to evaluate your financial capability against the income and asset requiremen­ts of the mortgage applicatio­n. Mortgage brokerage companies or bank websites are a good place to start if you need to apply for a mortgage. These sites usually come with a mortgage calculator function: all you need to do is put in the home price, LTV ratio of the mortgage and mortgage term, and it will be able to provide you with the essential informatio­n regarding your mortgage payment, your debt-to-income ratio and the stress test. Ask the brokerage company or bank for a free consultati­on if you want more informatio­n.

When you have completed the aforementi­oned steps, it’s time to register your subscripti­on with your real estate agency. Developers are required to announce sales arrangemen­ts and details at least three days before the launch of the sales—this includes the date, time and location of the launch as well as the number of available units. While every developer may have their own methods and procedures, typically, the pick order of buyers is determined through a draw, and prospectiv­e buyers are required to prepare a designated amount of deposit (usually HK$100,000, payable by cashier’s check, check or credit card) when they register their subscripti­on intention. When it comes time to sign the preliminar­y agreement for sale and purchase, the amount already paid through the registrati­on deposit will be deducted from the preliminar­y deposit; at the same time, the buyer will need to pay the remaining balance of the preliminar­y deposit.

 ??  ??

Newspapers in Chinese (Traditional)

Newspapers from Hong Kong