PLOT AND PLAN OR TURNKEY DEVELOPMENT: A SIMPLIFIED UNDERSTANDING OF THE DIFFERENCES

Laila Cassim | Conveyancing Supervisor

Imagine that you have finally decided to invest in your dream home. You come across two appealing options where one allows you to be actively involved in the design and construction process, while the other offers a fully completed, move-in-ready home. Both sound ideal, but which is the better choice?

These two types of property acquisition methods are known as Plot and Plan and Turnkey Development. While both offer the advantage of securing a newly built home, they differ in terms of financial obligations, risk exposure, and involvement in the construction process. Understanding these differences is crucial for making an informed decision.

WHAT IS A PLOT AND PLAN AGREEMENT?

A Plot and Plan Agreement involves purchasing vacant land and entering into a separate building contract to construct a home according to approved plans.

This approach offers:

· Customization - Buyer’s can influence the design, materials and finishes.

· Control - Greater involvement in the construction process.

· Flexibility - Ability to tailor the home to your specific needs.

However, there are also potential disadvantages to this approach:

· Cost Uncertainty - Unexpected expenses may arise due to material price fluctuations or design changes.

· Extended Timelines - Construction delays due to approvals, contractor schedules or weather conditions.

WHAT IS A TURNKEY AGREEMENT?

A Turnkey Agreement refers to purchasing a fully completed home from a developer. The buyer signs a single agreement and makes payment upon completion, thereby avoiding the complexities of managing construction.

This approach offers:

· Convenience - No involvement in the construction process.

· Cost Certainty - A fixed purchase price with fewer financial variations.

· Speed - Faster occupancy as the home is already built or is in the process of being built.

However, there are also potential disadvantages to this approach:

· Limited Customization - Buyers must accept the developer’s design, layout and finishes.

· Potential Design Constraints - Less flexibility in modifying structural elements.

WHAT ARE THE KEY DIFFERENCES BETWEEN PLOT AND PLAN AND TURNKEY AGREEMENTS?

FEATURE	PLOT AND PLAN	TURNKEY
Purchase Process	Buy land first, then construct	Buy a completed home
Customization	Full control over design and finishes	Developer decides on the design and finishes
Payment Structure	Staged payments during construction	Full payment upon completion
Risk Exposure	Possible cost overruns and delays	Fixed price with minimal cost variations
Timeline	Longer timeline for completion due to required approvals and construction	Shorter as the home is finalized or is in the process of being finalized

WHICH OPTION IS RIGHT FOR YOU?

Both Plot and Plan and Turnkey Agreements offer unique benefits and challenges.

If you value customization and are willing to manage construction risks, a Plot and Plan approach may be the right choice for you

If you prefer convenience, cost certainty, and a quicker date for occupation, a Turnkey Development might be the better choice.

When making a decision, it’s important to consider market conditions, future resale value, and your long-term financial plans. Consulting with legal and financial experts can further assist in making the best choice for your property investment.

For further details or advice in this regard, it is best that you consult with a Legal Practitioner.