PROGRESSIVE PAYMENT SCHEDULE FOR OFF-PLAN CONDOMINIUMS
Off-plan properties, otherwise known as “new developments,” are properties that are still under construction or on the phase of development planning, simply unbuilt properties.
Buying properties ‘off the plan’ means acquiring a property that doesn’t exist just yet, thus requires following a payment schedule. Initially, you will have to sign a contract indicating the agreed price based on architectural specifications, floor location, design or any modifications you require as a buyer, as well as the terms and conditions in fulfilling your payment.
Payment is broken down into several phases depending on the development’s completion. Commonly, you will have to go through this payment schedule:
1. Select your Unit
Select the unit that you are going to purchase and pay a non-refundable holding fee. The holding fee will take the property off the market, securing it for you whilst the sales contract is written and reviewed by you.
1. Signing of Sale & Purchase Agreement (SPA)
Once you’ve already decided to purchase an off-plan property, you will then be presented by a Sale & Purchase agreement. The SPA is the first and one of the most important documents that a property buyer should acquire because this serves as a proof of purchase and indicates the blueprint and all the important details of the property.
These details can be general or specific like number parking lots in the development or number power sockets in your chosen unit, respectively. Signed in front of a lawyer, SPA is a legal document that requires legal process with witnesses.
Upon signing SPA, the buyer will need to immediately pay a reservation fee or booking fee, usually between $1,000 to $5,000 (depending on the developer).
After signing SPA and securing your unit, you will now start to pay a down payment for the property, commonly at 10% to 30% of the property’s total value. Developers often give “pre-sale” discounts too, and the larger the downpayment you make, the larger discount you will receive. The biggest discounts are given when paying 100% upfront.
Depending on the terms and conditions between buyer and developer, the down payment may be fulfilled during the construction of the property and the balance comes after through loans. This commonly happens when the ratio of down payment is between 30% to 50% of the property’s total value; whereas not many people can pay it spot cash.
Another is that, the developer may require a buyer to pay 50% full downpayment prior to construction, then the balance must be paid during the construction period to completion.
3. Payment Plans
Upon paying the full down payment, the buyer may need to begin paying for the remaining balance. This can be done by monthly installment, stage installment or upfront payment plan.
- Monthly installment plan
As the name suggests, buyers commonly pay for the balance of their investment through monthly installments. This plan is paid at a certain percentage over a certain period of time (percentage ÷ number of months), normally 3 years or 36 months.
- Stage installment plan (depends on the various completion stages of the development)
This type of plan is most likely similar to monthly installment yet are made based on the phases of construction up until completion.
Stages of Development Construction/Completion
1st: Ground/Land Development
Includes all the works below and on the ground level such as clearing, piling, and the overall foundation of the land where the development will rise.
Note: Paying the balance may differ depending on the type of title, type of property (be it residential or commercial) or on the terms and conditions stated in the SPA. For instance, buyers may not need to begin their payment if the land is not yet cleared and piling has not begun.
2nd: Structural Framework
This is where the reinforcement of concrete framework and floor slab of the development begins until it reaches the buyer’s unit floor location.
Thus, this means that those who purchase units on the lower floors will need to begin paying the next stage of installment earlier than those who bought from the higher floors.
Note: Foreign investors, according to the law, are only permitted to purchase properties from first to higher floors (which are not attached to the ground).
3rd: Walls, Doors and Windows
On this phase, the developer has finally reached the buyer’s unit floor location where walls, doors, windows and window frames are coming into place.
4th: Ceiling, Wiring and Internal Cabling
After that, the roof, electrical wiring, plumbing, cabling and any other related works are done on this phase.
6th: Drainage and Sewerage System
Upon completion of the concrete and electrical works, the developers will then begin building the sewage and drainage systems that will serve the building.
5th: Internal and External plastering
Following the sewerage and drainage works, the developer usually begins plastering the development. Meaning, the developer will begin putting protective or decorative finishing on walls, ceilings and floors.
7th: Roads (serving the building)
Lastly, the final touch is typically fixing the roads within or close to the development’s area.
Note: Stage installment schedule (as indicated above) is used by some developers in other Southeast Asian countries, hence are not standard in Cambodia. The stages specified may still depend on the agreement between the developer and buyer.
- Upfront payment
Typically, within 30 days after signing the SPA, the buyer must pay the full amount of the property. The payment may sometimes be in partial, meaning the balance will only be paid upon satisfactory delivery of the service.
This type of payment requires a huge amount of money, nevertheless it is the most attractive payment plan for it requires no interest.
4. Vacant Possession/Turn-over
At the time that the development is completely finished, this is when the buyers must pay the final sum of their installment and get the possession of their unit. On this stage, the property must already be equipped with water and electricity supply.
Meanwhile, after the possession of the keys, the buyers/owners will now need to begin serving the full installment (if there is) to the bank, with additional percentage of interest (normally 12.5%).
5. Final Payments & Transfer of Title
Once Handover has been completed, the transfer of the condo title from the developer to the buyer can begin. The Ministry in charge of this process usually takes 8-12 weeks to complete this process. In most cases, the buyer is responsible for the transfer fees and taxes associated with this transfer.
After or during the construction period, there may also be some fees that the buyer/s must pay first before being in full possession of their unit. (e.g. Memorandum of Transfer fee)
Here’s a reference table that may help you put a clearer perspective in buying off-plan properties.
Note: The rates and amounts specified (below) are just intended as examples. Everything shall depend on the developer, or between developer and buyer’s agreement.
|DOWNPAYMENT||10% of the property’s total value|
|MONTHLY INSTALLMENT||40% in 24 months|
|TURN-OVER||50% (period depends on the bank or developer)|
|PER STAGE INSTALLMENT||%|
|INSTALLMENT based on the completion of:|
1. Ground development
|2. Structural framework & floor slab||10%|
|3. Walls, doors, windows & window frames||10%|
|4. Ceiling, wiring and internal cabling||10%|
|5. Drainage & sewerage system||10%|
|6. Internal and external plastering||10%|
|7. Development/enhancement of roads||10%|
Interested in buying off-plan condominiums? Here are some new developments in Cambodia:
Have you considered investing in the USA but don’t know where to start? The opportunities are endless to invest and one thing you will need is financing from a reputable company. Financing for foreign nationals is made simple by our friends at GoKapital, they have solutions for every case including hard money loans, commercial mortgages, and have great programs for foreign nationals. Be sure to check them out!