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Should you invest in 'new' or 'second-hand' property

Should you invest in 'new' or 'second-hand' property

Author: Pranil Maharaj
Date: 2018-12-07

Buying a new property

Buying an investment property straight from the developer has important financial advantages.

You will avoid paying anytransfer dutyon the property, and transaction costs are paid for by the developer. VAT will typically be included in the price, and there will be a lower deposit required initially, with the remainder being due upon completion,

Investing in a new property means that it won't require as much maintenance, during the first few years. Buying from an established developer also allows you to check the track record of this developer.

The downside is that you will most likely buy a unit off-plan, and you won't be able to see the finished product before buying.

This could, however, if done correctly, guarantee capital growth while not costing you any money until the apartment registers.

Buying a second-hand property

The advantages of buying a property that's been previously owned by someone else will be that you may be able to buy a property at a lower price, in an already established area.

However, there will be more costs involved. You will need to pay allbond and transfer costs, as well as the transfer duty dependent on the price. Depending on the condition of the property, there will be maintenance that has to be done. These costs will most likely be greater in a second-hand home compared to buying a brand new property. Your growth on a previously-owned home will in most cases will be lower unless you are buying in an area where a lot of new development is happening.

Finally

There are advantages and disadvantages to both buying options. Investment buyers should weigh these up every time they buy a property and go for what suits you best.