My finances, my projects, my life
December 14, 2018

Should I go for an off-plan project?

  Pierre Clément, founder of Nexvia myHOME November 27, 2017 6472

An off-plan sale, more commonly known as VEFA in Luxembourg, attracts many buyers every year. In 2016, 1 812 units were bought “off plan” in Luxembourg, representing 37% of the total sales in the country. Customization, reduced costs, better energy performances, there are many advantages to buying off-plan. This guide will unveil the secrets of VEFA properties, in order to be well prepared before signing the “contrat de reservation” (reservation contract), the document concluding an off-plan sale.

Delivery delays, rules to follow, financing terms, or building flaws to anticipate, an off-plan project is considerably different to buying an existing property. Before getting started, it is important to take your time and ask yourself the right questions.

Make sure VEFA matches your profile

Starting an off-plan project means going for a big-scale project, so knowing the full implications of the decision is important.

First of all, you need to know how to project yourself, since you will often only have architectural floorplans and 3D renders at your disposal. Some developers have put in place virtual visits thanks to technological advances, although is still used rather minimally. In most cases, you will need to make do with the floorplans and your imagination. If you have trouble projecting yourself, you may be disappointed when moving in.

Second key point, the completion time for off-plan projects is often between 18 and 36 months. And, without wanting to offend anyone, there are often delays between the expected date and the actual completion to take in account. This means that you have a long and heavy project to manage, with increasing intensity as the completion date approaches. Many weekends will be dedicated to supervising the project, adding finishing touches, choosing the kitchen, furniture, painting… And let’s not forget moving from your current to your new home.

There will also be many discussions that can end up in disagreements between the developer and yourself during the construction. In that regard, to avoid unnecessary frustrations, it is important to know your rights, and to refer to the plans and the “cahier des charges” (design brief) when in doubt.

An off-plan project requires a lot of imagination, time and energy indeed!

An off-plan project also has many advantages and allows much more flexibility compared to an existing property. Your home can therefore truly fit your lifestyle and match your personal criteria.

Choosing your project means choosing your lifestyle

An off-plan project also has many advantages and allows much more flexibility compared to an existing property. Your home can therefore truly fit your lifestyle and match your personal criteria.

It is crucial to analyse the exposition of the property, its position within the residence, but also anticipate the neighbourhood’s future prospects. It is also important to list and rank your criteria. Do you prefer big bedrooms or do you favour the living area space? Is it important for you to have a terrace or a balcony? Do you prefer a separate or an open kitchen? Do you want a small laundry room within your apartment or is a common laundry room satisfactory? The answer to these questions will allow you to choose a home matching your ideals, giving you the flexibility to make necessary changes to make it your dream home.

And when it comes to customization, you should know that the earlier you arrive in the commercialisation of the project, the more flexibility you will have. This includes choosing the best apartment, the most easily accessible parking space, the best cellar etc. Another big advantage to coming early: your stamp duty will be lower, since it is calculated on the construction part only.

Reading the design brief

Before talking about what is customizable, it is crucial to read the “cahier des charges” (design brief). It contains a lot of information related to the project (the consistence, the designation, the nature of the facilities and equipment, and the delivery deadlines). And these can vary significantly from one project to another.

Building with a triple A energy performance rating is the only legal obligation for developers. Depending on the situation, you may be surprised by low quality design briefs, with limited facilities and equipment. In such a case, it is always possible to make some changes, but these will generate high costs you will need to budget.

Choosing the right financing plan

It is vital that you find a financing plan that is both flexible and payable by successive instalments. Some banks allow you to repay the capital and sometimes even the interests at the delivery of the property. You therefore avoid increasing your monthly charge during the construction period.

It is also useful to know that the interest expense is deductible during the construction period, which represents huge tax savings.

It is also useful to know that the interest expense is deductible during the construction period, which represents huge tax savings.

Selecting a reliable developer

In Luxembourg like in any other country, developers will vary from one another. Who to choose between the small developer building a dozen units a year, and the more established developer? We cannot give a definite answer, but do have some advice to help you choose.

First of all, you should ask your acquaintances to gather opinions and past experiences with the company. You can sometimes ask the developer himself to visit existing completed apartments, either in the residence if the project is well under way or in another residence built by the same developer.

When a developer is less established on the market, it is important to note that the risk of bankruptcy is higher. Even if a completion guarantee exists, bankruptcy would automatically cause considerable delays in the project, and compromise the quality of the finished product.

Should I go for it?

If you are looking for an easy and quick solution, buying an existing property is maybe better suited to your needs than an off-plan project. However, if you are willing to undertake a project that will last a few years, an off-plan property might be more adapted. Despite the burden, the implication needed and the project risks, buying off-plan is the best way to build the perfect home of your dreams. And that is truly priceless!