Property acquisition is often perceived as one of life’s most significant projects. Whether you are considering buying a house for your family or an apartment as a rental investment, the choice between new or existing properties may seem obvious at first glance.
However, a third option, less known but full of advantages, deserves to be explored: buying a shell-and-core property.
The Term “Casco” Refers to a Building in its Raw State, where Only the Main Structure is Completed.
We will analyze the advantages of choosing this acquisition method, which offers both flexibility and economic potential. Are you ready to discover how this approach to buying can transform your real estate experience?
Follow the guide!
What is Shell-and-Core, and why should You be Interested?
This term therefore refers to a building in its raw state, where only the main structure, also known as “the shell,” is completed.
What Does Structural Work Include?
They encompass all masonry tasks that initiate the construction of a house. They include five main stages: foundation work, building drainage, substructure construction, wall erection, and roof installation.
Unlike new, ready-to-move-in properties, a shell-and-core property lacks typical finishes such as floor coverings, painted walls, or complete sanitary installations. However, this offers a partially blank canvas on which buyers can unleash their imagination and creativity.
Imagine entering a space where everything is possible. Shape your future home and its layout according to your tastes and needs, by choosing the materials, colors, and arrangements that best suit you.
The Advantages of Buying Shell-and-Core: an Opportunity not to be Missed
1. The Financial Aspect
One of the main benefits of shell-and-core is the price. On average, its cost will be lower than that of a new, ready-to-move-in property. Depending on the degree of completion, the price can represent between 50% and 70% of the final price of a finished property. It is therefore an economically attractive option for budget-conscious buyers.
2. Flexibility of Works
By opting for a shell-and-core property, you have the freedom to plan and carry out the work according to your own schedule and budget. You can choose to focus your efforts on the essential rooms initially, then tackle more complex work as time and resources allow. And most importantly, you can proceed at your own pace!
This flexibility is valuable for those who wish to personalize their space progressively and thoughtfully.
3. Total Control Over Finishes
For those who love to immerse themselves in a new project, you will have total control over the finishes. You can choose the materials, colors, and styles that match your personal preferences, without being limited by the pre-established choices of a real estate developer. This allows you to create a truly unique space in your image, where every detail reflects your personality and lifestyle. From underfloor heating to your bathroom tiles, nothing limits you!
4. Choice of Contractors
You will have the opportunity to select the contractors responsible for carrying out the finishing work. This allows you to work with trusted professionals and closely supervise the progress of the work. Furthermore, if you are a DIY enthusiast at heart, you can even decide to get involved and actively participate in the transformation of your future home.
5. Capital Appreciation Potential
Investing in a shell-and-core property can also present interesting long-term capital appreciation potential. By progressively renovating and improving your property, you can increase its market value and realize a significant profit upon its eventual resale. This is a long-term investment strategy that can offer attractive returns for savvy investors, whether as an individual or a company.
Pitfalls to Avoid and Precautions to Take
Despite its many advantages, buying a shell-and-core property also involves some potential pitfalls that should be taken into account. Here are a few points to keep in mind:
1. Complexity of Taxation
The taxation applicable to this type of purchase can be complex and vary depending on the origin of the building and the work carried out.
A shell-and-core building cannot be strictly classified as new or existing.
The associated taxation varies depending on the situation: it may include VAT or registration duties.
In Wallonia and Brussels, registration duties of 12.5% are commonly applied to structural work, and 10% in Flanders on the building structure.
But, as there is always a “but” in Belgium, finishing works are subject to 6% VAT if the building is more than 10 years old; otherwise, it’s 21%.
However, this rule does not apply uniformly to all shell-and-core sales. If the building is new but left in a shell state, 21% VAT applies. If the building sold results from a demolition/reconstruction or a major renovation, 12.5% registration duties apply.
As you can see, it is quite complex, especially for novices. It is therefore essential to inquire with the competent tax authorities to understand the tax implications before buying.
2. Risk of Budget Overrun
Although buying a shell-and-core property may seem economically advantageous at first glance, it is important to keep in mind that renovation and finishing costs can quickly accumulate. It is therefore essential to establish a realistic budget and allow for a contingency to cope with any unforeseen events.
3. Decennial Liability Insurance
Unlike buying a new property, where decennial liability insurance offers additional protection in case of construction defects, buying a shell-and-core property can make it more difficult to hold the seller accountable in case of problems. It is therefore recommended to draft a detailed contract that specifies the state of completion of the property and the responsibilities of each party, in order to protect oneself in case of dispute.
In conclusion, buying a shell-and-core property offers a unique opportunity to create a fully personalized living space, while benefiting from an attractive price and total flexibility in carrying out the work.
However, it is important to be well-informed, plan carefully, and take the necessary precautions to avoid potential pitfalls and maximize the advantages of this innovative approach in the real estate world.
Whether you are looking for a primary residence, a rental investment, or a renovation project, buying a shell-and-core property can be an option to seriously consider to successfully realize your real estate projects!
