Last edited 31 May 2018

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A Guide to Investing in Off-Plan Property in the UK

The definition of buying a property off-plan is when you purchase the property before it has been built. Many people are often confused by this type of investment, viewing it as a risky move, yet it can be a very rewarding process, especially in today’s markets where property prices are increasing.

Buying off-plan can sometimes be more complex than first thought, but with more schemes being developed to help people to buy such properties, this form of property buying is becoming much more common across the UK.

Contents

[edit] The Off-Plan Buying Process

The buying process for off-plan property can be slightly different to what some people may be used to, so it is important to understand the process before making a decision to purchase your own off-plan property. The process is as follows:

  1. Research into different developments and consult a mortgage advisor to discuss your own personal circumstances and how they may impact your investment.
  2. Pay a reservation fee to reserve your property.
  3. Arrange for the legal elements of your property purchase to be handled by a professional conveyancer.
  4. Get a mortgage put into place for your property (should you need one) by searching for the right product and discussing your circumstances with experts, in order to find the best solution for you.
  5. Complete all paperwork and signatures, exchange contracts with the seller and make payment of the deposit.
  6. Ensure that a snagging survey is conducted close to the completion date, so that you can be sure that there aren’t any issues to worry about.
  7. Be ready for when the project is officially completed. The short stop date would detail the expected date of completion, whilst the long stop date would detail the date which the project has to be completed by.

[edit] Off-Plan Property VS Completed Residential Property

One of the biggest decisions that investors have make when looking for their next property investment is whether they want to purchase off-plan or an existing residential property. Both types of property possess their own pros and cons, and each property type may suit one investor more when compared to the next. The pros and cons for each property type are as follows:

[edit] Off-Plan Property Advantages

  • A developer is likely to deal with the property transaction in-house, making the whole process less complex than some may imagine.
  • Some developers ensure that a management company is in place before the transaction, meaning that the management and maintenance of the property, as well as the sourcing of tenants, may already be taken care of.
  • The purchase price of your off-plan property is likely to be lower than similar existing properties on the market, due to the fact that the developer is the only other party involved in the process.
  • It is likely that the value of your property will increase from when you initially purchase it, even by the time that you are able to have tenants living in it.
  • Off-plan properties are brand new, meaning that no additional work would need to be done before renting the property out to paying tenants. Some developers even offer furniture packs, with this making the whole process even quicker.

[edit] Off-Plan Property Disadvantages

  • As off-plan properties are purchased whilst in construction, it can often be the case that projects are delayed.
  • It can sometimes be a difficult task to secure a mortgage for an off-plan property, and although you may be able to get one, it is likely that for off-plan properties you will need to have the cash in reserve.
  • The biggest risk for off-plan properties, despite being very rare, is that the development company become bankrupt and are unable to complete the project. To minimise the risk of this, you should always be sure that you are working with a trusted company that has years of experience.

--HopwoodHouse 12:41, 31 May 2018 (BST)