Buying off-plan in a new development

An off-plan purchase is a contract for something that does not exist yet, and usually for something that cannot yet be registered in anyone's name. The Alienation of Land Act asks whether land is "registrable", which it defines as capable of being registered as the subject of a separate title deed because the requirements of any law for that registration have been complied with. In a sectional title scheme that point is reached when the registrar registers the sectional plan, which the Surveyor-General has approved, and opens a sectional title register (Sectional Titles Act, section 12). A freehold stand in a new township follows the same logic: it can be registered separately only once the legal steps for the township are complete. Until then there is no title deed and nothing a bond can be registered over.

That single fact drives almost everything else. Your transfer date follows the developer's construction programme and the Deeds Office rather than the ordinary conveyancing timeline. Your deposit sits somewhere for months. And the Alienation of Land Act 68 of 1981 treats you as a buyer who needs protecting, because its definition of a unit expressly includes a proposed unit.

The five steps below are the usual order. The table after them sets what that order means for you side by side: what can work in your favour and what you carry.

• The developer sells off a marketing plan and a municipally approved building plan.
• Construction happens, at the developer's pace and subject to whatever extension rights the contract reserves.
• A land surveyor draws the sectional plan of the building as actually built, and the Surveyor-General approves it.
• The Deeds Office registers that plan and opens the sectional title register. Your unit now exists in law.
• Transfer and bond registration happen together, and the purchase price becomes payable.

A developer that is a registered VAT vendor and sells new units as part of its enterprise makes a taxable supply. SARS says a property sale is subject to either VAT or transfer duty, never both, and that VAT takes preference when the seller is a registered vendor and the property forms part of its enterprise.

The Transfer Duty Act carries the matching exemption in section 9(15). SARS's VAT 409 guide describes it as applying to the extent that the supply is subject to VAT. As the VAT Act inserted it in 1991, no duty is payable on a transaction that is a taxable supply to the buyer if three things are met: the seller certifies that the VAT has been paid to it and has been, or within the time the VAT Act allows will be, accounted for (a zero-rated supply instead needs the information SARS requires); any security SARS requires for VAT not yet paid has been lodged; and the Commissioner has issued a certificate that the requirements are met. We read that 1991 insertion, not any later text of the subsection, so a conveyancer can confirm it still reads that way. The paperwork is the seller's and SARS's, not yours.

Normally you do not pay that VAT as a separate line. SARS's VAT 409 guide (a guide, not law) says section 64 of the VAT Act deems the price charged by a vendor to include VAT, and that under section 65 a price advertised or quoted must include it. We read both sections as enacted in 1991. Where a contract is silent on VAT, SARS says the stated price is treated as VAT-inclusive, and it advises that the contract say which tax is payable. The guide also describes a 1998 Supreme Court of Appeal decision on a sale whose contract was silent on VAT because the parties assumed the buyer would pay transfer duty. The sale turned out to be a taxable supply, so the stated price was VAT-inclusive, and the court would not treat the buyer's agreeing to pay duty on top as letting the seller add the VAT. We have not read the judgment itself. Whether a contract can make the price exclusive of VAT is a question for your attorney. The price clause is the clause a dispute turns on.

Seen in rand: on a R2 000 000 resale in the 2026/27 tax year the buyer hands SARS R33 786 in transfer duty on top of the price. On a R2 000 000 off-plan unit the buyer hands SARS no duty, but roughly R260 870 of that price is VAT the developer accounts for. So no transfer duty does not make a unit cheaper by itself. The tax is larger and it sits inside the price, and what shrinks is the extra cash you need on top of it. The comparison that matters is the full price of the two homes, not the duty line, and the transfer duty calculator takes your own figures. For the duty rules in general, see transfer duty and VAT on property.

The VAT rate has been 15% since 1 April 2018. When it rose from 14% then, SARS's FAQ on the increase set out a rate-specific rule (section 67A) for a home bought on a written agreement signed before the date: the old rate applied if the VAT-inclusive price was stated in the agreement and both payment and registration fell on or after the date. Its list of what counts as residential property for that rule names an existing dwelling, plot-and-plan deals and a new dwelling built by a vendor in a construction business. It does not mention an off-plan sectional unit, so we do not say whether one is covered. The rule matters off-plan because of the long gap between signature and registration. We have not read the current text of section 67A, so we do not say how it would apply to a future change. That is a question for a conveyancer.

How large the deposit is, the contract decides. The provisions this guide relies on regulate where the money sits, not how much it is. Section 26(1) of the Alienation of Land Act says no person may receive any consideration under a deed of alienation relating to an erf or a unit until it is registrable (and, where the contract has to be recorded under section 20, until it is recorded), and section 26(2) makes breaking that rule an offence. The Act defines consideration as the purchase price and interest on it, leaving out rent or occupational interest that is reasonable compensation for the buyer's use of the land (section 1). A deposit is therefore covered, and occupational rent is not.

If the developer is to receive any money before the unit is registrable, section 26(3) allows two routes, and the contract must use one of them. The first is that you entrust the money to an attorney or an estate agent, who keeps it in a trust account for the seller's benefit under the contract. The second is that the developer takes the money directly, but only after you have been given an irrevocable and unconditional guarantee from a bank, building society or registered insurer of the kinds the section names, to repay you if the unit does not become registrable within the period the guarantee states.

Section 26(4) is the provision worth remembering. If the developer becomes insolvent before the unit is registrable, the money held in that trust account, or covered by that guarantee, becomes payable to you immediately. The Act defines an insolvent to include a person whose estate is under sequestration and a company in liquidation that is unable to pay its debts. The definition we read does not mention business rescue, so whether business rescue counts is a question for an attorney. A deposit paid into the developer's own current account has none of that protection, and taking it that way is what section 26(1) forbids.

Section 26 took its present shape in the Alienation of Land Amendment Act 51 of 1983, and gov.za lists it as in force from 7 December 1983. The later amending Acts that we read (1993, 1995, 1996 and 1998) change other sections of the Act and the definitions of "registrable" and "land", not section 26. The section still names the Banks Act of 1965 and the Insurance Act of 1943, which later legislation has replaced, so a conveyancer can say how those references read today.

• Which trust account holds the deposit, named in the contract with the attorney's details.
• Who gets the interest. Interest on a large deposit over many months is real money. For an attorney's trust account, section 86 of the Legal Practice Act 28 of 2014 sends interest on money the practice invests of its own accord to the Legal Practitioners' Fidelity Fund, and lets the practice open a separate interest-bearing account on a person's instructions, with the interest paid to that person less 5% to the Fund (section 86(3) to (5)). Whose instruction counts for a deposit, and whether such an account is opened, depend on the contract. An estate agent's trust account falls under a different statute that we have not read.
• What the guarantee says, if the developer holds the money directly, and by when it must repay.
• That the developer is a registered home builder, and its record. Section 10(1) of the Housing Consumers Protection Measures Act 95 of 1998 (the 1998 Act, in the rest of this guide) forbids a builder that is not registered to receive any consideration for the sale of a home, and section 21 makes contravening it an offence. Section 9 obliges the NHBRC to keep a database of registered, suspended and deregistered home builders, with the homes each has enrolled, the complaints it considers valid and the builder's grading, free of charge to a housing consumer for their own use.
• That a written agreement exists and the home is enrolled with the NHBRC. Section 13(7) bars the builder from taking a deposit before an agreement with the required terms exists, and from taking any other consideration before enrolment is done.

No Act hands you this list. It is a practical checklist built on the rules in this guide, so it is practice, not law, and the last column says which rows rest on a statute and which do not. A conveyancing attorney can read the developer's actual contract before you sign it: the contract is where the rules above either reach you or do not.

A bond normally registers together with the transfer, which happens only once the register has opened (see the first section). Whether a lender or the contract asks for anything earlier, such as interest on money paid out in stages, is a term of that loan offer and that contract.

That cuts both ways. In a buyer's favour, a monthly bond instalment normally does not start while the building goes up, so the exposure during construction is the deposit, not a monthly payment.

Against a buyer, a completion date a year or more away is a long time for a bond grant to stand still. A bank assesses income, credit record and the property's value when you apply, and those can change before registration. Whether the bank re-confirms the grant near transfer is a question for the bank, and bond pre-approval explains how the assessment is done. Whether the sale is conditional on your bond, and until when, is a suspensive condition: subject to bond approval explains how those work. To compare lenders, browse bond originators on Privately.

There can be a gap between the unit being finished and registration. A buyer who moves in during it pays occupational rent and is not yet the owner. A rate stated in rand in the contract or occupation agreement is what that rent is measured against.

A new home carries statutory warranties that a resale generally does not. The 1998 Act requires the builder to be registered with the NHBRC, and requires a home in a category the Minister prescribes to be enrolled before construction starts. Section 13(2) writes the warranties into your agreement whether it mentions them or not, and section 13(6) makes any clause that excludes or waives them null and void. So a voetstoots clause cannot waive them the way it can on a private resale.

The clock starts on the occupation date. The Act defines that as the date the first buyer accepts the home, as reflected in a document confirming acceptance, or, if the NHBRC does not receive that document or cannot determine the date, the date on the certificate of occupancy. It is not the transfer date. That makes the written, dated acceptance the document that decides when your three months, twelve months and five years begin.

Take an example. You accept the home in writing on 1 March 2027, and transfer registers on 1 September 2027. Counted from occupation, as the Act counts, your window for snag list items closes no earlier than 1 June 2027, for roof leaks no earlier than 1 March 2028 and for major structural defects no earlier than 1 March 2032. Counted from transfer, which is not how the Act counts, the same three dates would read 1 December 2027, 1 September 2028 and 1 September 2032, each 6 months later. A buyer who trusted the later dates could miss the real ones. These are example dates, and your agreement may give you longer than the minimum.

• The enrolment certificate. Section 14(3) obliges the builder to give you a copy, and a claim on the fund depends on the home having been enrolled at the occupation date (section 17(1)(c)).
• Notice goes to the builder, in writing, with a date. The Act speaks of notifying the home builder, and a dated written notice is how a buyer shows the builder was told.
• The fund is a backstop, with limits. The Act lets the Minister prescribe the minimum and maximum amounts the NHBRC may spend on a home and which costs a claim may include (section 7(2)(e), as amended in 2007), and lets the NHBRC reduce a payment, settle a claim in full and final settlement in exceptional circumstances, or refuse a claim (section 17(2), as amended in 2007). The NHBRC's warranty page shows no rand figure, so the limit that applies to a given home is a question for the NHBRC. The fund pays where the builder no longer exists or cannot meet its obligations (section 17(1)(d)). The 2007 amending Act, which added roof leaks to the fund's cover, is listed by gov.za as in force from 9 April 2008.
• The warranties follow the house. Section 13(4) deems a buyer who sells within the five-year structural period to have ceded their rights to the next owner.
• Which Act governs. The Housing Consumer Protection Act 25 of 2024 (the 2024 Act) will repeal the 1998 Act (section 91), but section 94(2) says it commences on a date the Minister determines by notice in the Gazette, and different dates may be set for different sections. We found no commencement notice as at 20 October 2026, and the gov.za page for the 1998 Act still lists it as to be repealed. Section 40 of the 2024 Act sets five years for structural defects and two years for roof leaks, counted from 90 days after the final inspection by the NHBRC's inspector (or after the inspector certifies compliance, where the inspection found non-compliance). If no final inspection is done because of an omission by the Council or its inspector, the start is deemed to be 90 days after the right of occupation is granted (section 40(1), (2) and (6) to (8)). Until the 2024 Act commences, the 1998 Act is the one this guide describes. Your conveyancer will know which applies to your agreement.

The snag list is the walk-through done before accepting the home: doors that bind, tiling, paint, missing fittings, a geyser sited somewhere other than the plan. Section 13(2)(b)(ii) gives at least three months from the occupation date to notify the builder of any deviation from the terms, plans and specifications of the agreement, or any deficiency in design, workmanship or material. The NHBRC says those three-month items are not covered by its warranty, so the builder is the one who has to fix them.

Section 13(1)(c) requires the specifications and the plans approved by the local authority to be attached to your agreement as annexures. Those annexures, not the brochure and not the render, are what the finished unit is measured against.

The floor area matters beyond the plan. In a scheme for residential purposes only, the participation quota is worked out from floor area (Sectional Titles Act section 32(1), in the consolidated copy we read). The quota fixes the owner's undivided share in the common property (section 32(3)) and the share of the levies (Sectional Titles Schemes Management Act section 3(1)(f)). Sectional title vs freehold covers participation quotas and levies. For a new scheme, the contract clause on how far the area may differ from the plan is the clause that governs.

Then there is the right to extend. Section 25 of the Sectional Titles Act lets a developer reserve, in a condition imposed when it applies to register the sectional plan, the right to erect further buildings, or to extend existing ones, on a specified part of the common property within a stipulated period, which is how phased schemes are built. Section 25(14) requires the right to be disclosed in the deed of alienation to every purchaser, and section 25(15)(a) makes a deed that does not disclose it voidable at the purchaser's option. Because the right is reserved over a specified part of the common property, a lawn in the render can turn out to be the next phase's footprint. We read the section in a consolidated copy current to 2016, so later amendments were not read.

Late completion is one of the risks the contract has to deal with. An off-plan contract can give an anticipated completion date and then extension rights for causes such as weather, strikes or municipal delays, and its clauses say which. An anticipated date with unlimited extensions is not a deadline. A long-stop date is the clause that does the work: the point at which the buyer may cancel and recover the deposit with interest. It is a clause a buyer can ask for before signing. Once signed, the contract says what it says.

Without such a clause, whether lateness lets a buyer cancel depends on the contract and on the general law of contract, and an attorney can say which. A late completion date, on its own, does not necessarily let a buyer walk away.

The Consumer Protection Act 68 of 2008 may also help. Its definition of goods includes a legal interest in land (section 1), and it applies to a transaction by a supplier acting in the ordinary course of business (sections 1 and 5), which points towards a developer's sale. It has exclusions, for example for a buyer that is a company above a set size (section 5(2)(b)), and we have not read a court decision on a developer's sale of a home. How it combines with the NHBRC warranties on a given defect depends on the facts, so that is a question for an attorney.

Insolvency is the tail risk. If the developer becomes insolvent, as the Act defines the term, before the unit is registrable, section 26(4) of the Alienation of Land Act returns the money held in trust or covered by the guarantee. It does not give the buyer the building, and it does not make the buyer a secured creditor for anything else. There is a second consequence. As enacted in 1998, section 14(5)(a) of the 1998 Act deems a home's NHBRC enrolment automatically cancelled when a court grants an order for the provisional liquidation or sequestration of the home builder before the occupation date, and subsection (5)(b) and (c) do the same when the builder's registration is withdrawn or suspended. Section 14(6) lets the NHBRC reinstate an enrolment. The three Acts that amend the 1998 Act (1999, 2001 and 2007) leave subsection (5) as it was, so cover is not simply unaffected. How that plays out for a given home is a point to put to an attorney.

A unit bought with the deposit in trust, the enrolment certificate in hand and the approved plans annexed to the agreement carries a different shape of risk from an existing house, and the paperwork is where that difference lives.

Not every new home is bought from a developer. You may buy a home under five years old from the person who first took occupation of it. The builder's obligations do not necessarily end with the first owner.

Section 13(4) of the 1998 Act deems a first owner who sells within the five-year structural period to have ceded their rights under section 13(2) to the next owner, and section 13(5) applies the same rule to later sales inside that period. The Act's definition of a housing consumer includes a successor in title. The periods keep running from the original occupation date, which the Act defines by the first owner's acceptance of the home. On our reading, a home first occupied on 1 March 2027 stays covered for major structural defects until at least 1 March 2032 whoever owns it by then, while the three-month and twelve-month windows will normally have closed for a later buyer.

The first owner's paperwork is what shows what is left, and an attorney can confirm that before a buyer relies on it.

• The enrolment certificate. A claim on the fund depends on the home having been enrolled at the occupation date (section 17(1)(c)).
• The occupation date and the document that records the first owner's acceptance. They fix when each period began and when it ends.
• Any defects already notified, and what the builder did about them.
• The agreement and its annexed plans, because the warranty is measured against them.
• Whether the builder is still trading. The fund pays where the builder no longer exists or cannot meet its obligations (section 17(1)(d)).