Many new build properties are sold before they are built, this type of purchase is called buying property off plan, meaning buyers are committing to purchase a property they’ve only seen in plans.
This is usually before any development has taken place, once the plans have been finalised.
Whilst buying off plan isn’t always as straightforward as buying a property that already exists, there are many benefits to purchasing at the earliest stages of a build.
With computer generated imagery you can now see very easily what the finished property will look like.
Some developers are even able to offer a simulated experience where you can see the property as if you were standing in it and walking around.
It is common for there to be a small scale model of the site created to give potential buyers an idea of how the entire development will be laid out.
Whilst no one can predict exactly what the property market will be like once the property is built, buying in a popular location can add certain assurances on property values.
It’s also wise to have done some research on the developer to ensure they have a good track record before you commit to a purchase.
Benefits of buying off plan
For many purchasing property off plan, a key benefit is the potential for increase in value whilst building works are underway, there is often greater capital appreciation than when purchasing property that is already built.
Some investors choose to sell the property before the building work has completed, as in many case they have seen positive capital appreciation whilst only having committed deposit monies to the purchase.
This type of investing, referred to as ‘flipping’, can be risky as the property prices are not always on a positive trajectory and you can never guarantee you’ll find a buyer meaning you’ll have to complete on the purchase.
Other financial benefits when buying a property off plan can include a discount for those who commit to a purchase as soon as they are released for sale and in some cases the developers cover the cost of the applicable Stamp Duty Land Tax.
Something that many buyers are drawn to when considering buying their home before it’s been built is that they will be able to choose the exact finish; selecting their preferred flooring, tiles, kitchen units and work tops amongst other elements.
Questions to ask when buying off plan:
What is the expected completion date of building works?
Developers are usually able to give you an idea of their target build completion, such as Spring 2022 or Autumn 2020.
Whilst it is unlikely that they’ll be able to give you an exact date for some time it’s good to have an idea of the rough timings.
As the completion date draws closer the developer will be able to give you a much clearer idea.
It’s also useful to establish when your particular unit is due to be completed compared to the rest of the development, if you’re to be one of the first are you happy to potentially live in a building site for many months or even years?
‘Unit’ is the term used for a property within a development, for example when buying off plan you might see your particular property listed as unit 15.22 which likely has some reference to the floor within it, this usually changes to Flat 22 before you move in.
What warranties will be included?
We expect newly built properties to come with a build warranty, such as the 10 year NHBC construction warranty, which is essentially an insurance policy on the property.
There are different companies which supply warranties and exactly what is covered can vary to be sure to understand what is covered and for how long.
What will the service charges be?
Similarly to the completion date, developers are unlikely to be able to give you a firm figure as to what the applicable service charges will be once you’re moved in.
They can usually provide a ballpark figure based on what costs are too be covered within the service charge; building insurance, lift maintenance, upkeep and cleaning of communal areas and gardening can all be added in to the charges.
Sometimes utilities are included such as heating and hot water depending on which systems are installed.
Buying off plan
There are pros and cons to purchasing property off plan, it can be years before you’ll be able to actually move in which rules it out as an option for many.
However, if you’re not in a hurry and you love the idea of living in a modern home where you’ve chosen the finish to your style preference it could be an excellent opportunity.
If you’re considering purchasing a property off plan and would like guidance, our team would be delighted to assist. To learn more about our services please contact us for a no obligation discussion.