Buying off-plan means paying for a home that does not exist yet. Prices can be lower, the home is new and energy-efficient, and you may choose finishes. The risks are just as real: the developer can be late, change the design, run out of money or go bust while holding your stage payments.
The protection you get depends on the country, and on whether you insist on it.
How payments work
A typical schedule: a reservation fee, then 20–40% in stages during construction, then the balance at completion when the deed is signed. Some developers ask for more up front in exchange for a discount. The more you pay before completion, the more protection you need.
The protections to insist on
- Spain. Developers must guarantee money paid before completion with a bank guarantee or an insurance policy, individually for each buyer, and payments must go into a special account. Ask for your guarantee certificate after every payment. New homes also carry a ten-year insurance against structural defects.
- France. In a sale off-plan (VEFA), stage payments are capped by law at each step, and the developer must provide a completion guarantee.
- Portugal and Italy. Protection is weaker, so negotiate a bank guarantee or have payments held in escrow, and register the preliminary contract where possible. Italy has rules requiring a guarantee for homes sold before completion: ask your lawyer to confirm it is in place.
- Dubai. Off-plan payments go into a project escrow account regulated by the Land Department, and banks lend at most 50% on off-plan homes.
- Turkey and other markets with less protection. Pay as little as possible before completion and only into accounts in the developer's name that your lawyer has checked.
What to check before you reserve
- the building licence, and whether it is final or still under appeal
- the developer's track record: finished projects, any lawsuits
- who owns the land, and any mortgage over it
- the specification in writing, including materials and appliances
- the completion date and the penalty if it is missed
- your right to cancel and recover payments if the licence is refused or the delay passes a set date
- what happens if you need to sell before completion (assignment fees)
VAT and costs
On a new home bought from a developer, VAT usually replaces transfer tax and is included in the price: 10% in Spain plus stamp duty, 20% in France and Monaco (in the price), 10% in Italy for most homes. Use the buying costs calculator with "New build" selected.
Handover and snagging
Snagging at handover
Send the list of defects to the developer in writing, with photos, and keep a copy. Most countries give a period after handover in which the developer must fix finishing defects, and longer periods for structural problems.
Questions people ask
Can I get a mortgage on an off-plan home?
The mortgage is usually signed at completion, when the home exists. Get an agreement in principle early and check that the bank will lend on that development.
The developer offers a guaranteed rental income. Is that safe?
Read who guarantees it, for how long, and what happens if the operator fails. It is often built into a higher price.
What if the project is late?
Your contract should set a long-stop date after which you can cancel and get your payments back with the guarantee. Without one, you may have to wait.
This guide is general information, not legal, tax or financial advice. Rules change; check the details with a local professional before you sign or pay anything.