What is Off-Plan Property?
Go back 20 years and off-plan purchases were almost unheard of in the UK and solely the preserve of purchasers in the Far East, and a few property speculators in London. Now it is a firmly established mode of purchase and UK buyers are engaged fully in the method of sale, and the opportunities it may present.
Purchasing an apartment before it’s completed can feel risky. However, the right property can increase significantly in value after it’s built, making purchasing off-plan a financially sound decision.
Are you interested in buying off-plan property? In this guide, we’ll address some of the most common questions property buyers have about the process of buying an apartment before it’s ready to move into.
Take a look at our range of off-plan developments or call us now to speak to one of our sales advisors on 020 7620 1500.
What Does “Buying Off-Plan” Mean?
Buying off-plan property means purchasing property – typically an apartment – in advance of its completion. Off-plan property is typically sold prior to construction beginning at a significant discount, often with a small deposit requirement.
In July 2016, Galliard launched six developments in and around London - all selling off-plan - attracting a number of local buyers as well as overseas investors, particularly first-time buyers looking to grab one of the apartments going from just £139,995. Purchasers were given the opportunity to exchange contracts on the day, only paying a £2,000 reservation deposit, with a balance up to 10% due within 21 working days. Developments such as Essex House in Brentwood, as well as Atria and Skyline in Slough, were particularly popular, being situated along the new Crossrail route which is anticipated to provide investors with wholesome returns in the lead-up to its commencement in 2018/2019.
What are the Advantages of Buying Off-Plan Property?
Real estate prices in London are rising steadily, and although there’s no guarantee that a home or apartment worth £750,000 will be worth £900,000 next year, residential property in London has shown itself to be a safe asset class.
Buying off-plan lets you purchase property at a price that could be below its future market value and the principle has become a commonplace method of sale across the country; although London, due to the potential returns on capital, and a strong rental market, is where most off-plan purchases take place.
Buying off-plan is ideal if you want to resell the property once it’s finished. In order to purchase off-plan property, you usually need to provide a deposit of just 10-20% of the property’s value, making securing the property simple and affordable.
Whether you plan to resell or live in the apartment, one of the biggest advantages of buying off-plan is selection. Unlike in completed buildings, you can usually select the ideal unit to suit your needs, tastes and budget when buying off-plan property.
In a rising market, some developers will permit the contracts to be sold on, which means purchasers can take a profit on the unit before it is built by selling the contract to another party.
If you've decided buying off-plan is for you, have a read of our guide on 'Steps to Take Before Visiting a Marketing Suite' to help you tick all the boxes before picking your perfect development.
What are the Disadvantages of Buying Off-Plan Property?
Buying off-plan property is far from risky, but the majority of developers are now offering a deposit guarantee for extra security and peace of mind. However, it’s obviously not as certain as buying a new and completed or pre-owned property which you can ‘touch and feel’.
There’s also the possibility that the property you purchase doesn’t increase in value as much as you expected, or at all, during its construction. To ensure optimum ROI, it’s best to look for off-plan properties that have been built by reputable developers, within areas with growing levels of investor demand. Developments near transport facilities always tend to do well and areas undergoing regeneration are sure to see an increase in capital value.
The Public Opinion on Buying Off-Plan
Buying off-plan used to be thought of as risky, particularly during periods of poor or unstable economic performance. However, deposit guarantees and the steadily performing London property market, have made buying off-plan property steadily more popular throughout the last 20 years to the extent where it has become commonplace in the UK property market.
Off-plan property has been suggested by leading property experts as a good idea for maximising your buying power and potential return on investment. In 2014, The Telegraph referred to it as “a dead cert way of getting more for your money”.
Buying Off-Plan Property in London
Buying off-plan property is simple, especially with the large amount of development going on in London today. A wide range of apartments, from studios to large family apartments and houses, are available for purchase off-plan.