The Comprehensive Guide to Off-Plan Property

When it comes to real estate, you’ve probably come across the term ‘off-plan’. If you’re thinking about buying a new-build home, developers tend to give you the option of buying property off-plan. With that said, what exactly is off-plan property, and how does buying off-plan work?

From exploring the benefits and limitations, mortgage implications, the construction process, and everything off-plan property entails – in this article, we will be outlining our comprehensive guide to off-plan property.

If you’re considering buying off-plan property and want to do so in the safest and most reliable and affordable way, with developers you can trust, look no further than Salboy to guide and assist you with the entire off-plan property buying process. To find out more about the business, plan discounts and how Salboy can help you with all things relating to off-plan property, get in touch with us today.

What does off-plan property mean?

Buying a property off-plan means that you are buying property from a developer before it has actually been built. Therefore, off-plan property is any property that is considered a property and can be purchased before a structure or building has actually been constructed.

Buying a property that is in the process of being developed but has not yet been completed is known as off-plan buying. Pre-constructions are often advertised as developments to property developers and early investors in order for the buyer to obtain more advantageous financing terms and conditions from their lenders.

For a reasonably priced, small investment, you can acquire a brand-new home or apartment through off-plan buying, and you can even sometimes have a role in the design and construction by being able to have some say and input. 

Off-plan homes can be purchased in many area types, including in entry-level city developments with off-plan buy-to-let mortgages. Many off-plan properties are subject to substantial capital growth and capital gain, which makes them an appealing prospect.

How to buy an investment property

The process of purchasing a property off-plan differs a lot from purchasing a property that has already been constructed. Here is the process of buying off-plan property. 

  1. Speak with a mortgage advisor

When undergoing any home-buying procedure, the first thing you should do is consult with a mortgage broker to see whether you qualify for the loan amount you require for the property. 

A mortgage expert will be able to work out and clarify exactly how much you can borrow once you’ve saved for your deposit. You should let the mortgage broker know you’re planning on purchasing property off-plan so that they can identify a lender that can provide an off-plan mortgage agreement.

  1. Look for developments and choose a developer

Browse the web for any existing developments or new projects that are in the works and set to begin development in the location where you want to buy. Examine the plans and designs for the entire development to grasp a sense of the type of property you could be living on in the future if you were to purchase it.

It’s also a good idea to find the right developers for you. Examine their strategies, reputation and past work through carrying out extensive research on them. You may even want to pay a visit to the showroom/home on your property to get a proper feel of the quality of finish your property is likely to receive. 

  1. Reserve your property

You’ll need to reserve your property with the developers and make a reservation payment fee once you’ve chosen the development you desire and are convinced that you want to go through with your off-plan purchase. The reservation fee is usually between £500 and £1,000 but can range up to as much as £2000.

  1. Appoint a solicitor to manage the legal side

To manage the legalities of buying a house, you’ll need to hire legal help. A conveyancer, often known as a solicitor, handles all of the legal work involved in purchasing a new house, so look for one that has expertise working with off-the-plan homes.

  1. Arrange a mortgage

To ensure that your house is worth what you’re paying for it, your lender will arrange for a surveyor’s value based on the plans and construction specifications. They will be able to provide you with a mortgage after everything is completed.

  1. Finish paperwork and exchange contracts

Contracts must be signed, and an exchange deposit must be paid. You’re legally obligated to pay the remainder of the deposit and purchase the property once you’ve exchanged contracts.

  1. Snagging your property

If feasible, do a snagging survey in the weeks leading up to the final completion to check for any flaws. This is when you check your new home and point out anything that you don’t like or that isn’t up to your expectations.

  1. Prepare for completion

When your new-built house is ready, your developer will provide you with a completion date. You’ll need to pay the remaining payment on the property on this day, and then you will be granted the keys to move into your new property.

Advantages and disadvantages of buying off-plan

Buying off-plan property can have many pros and cons that ultimately depend on the property market within your city or area. Additional pros and cons apply to homes within a city centre location.

Here are some of the primary advantages and disadvantages of buying off-plan.

Advantages of buying off-plan property

  • Can often save money – What’s most appealing about purchasing a property off-plan is that the cost can be determined a year or two before the development is even completed. As a result, your new property may potentially end up having a higher value and being worth more when it comes to moving in than when you purchased it. Off-plan houses could be considered affordable homes if values do not reduce.
  • Off-plan homes have great capital growth benefits.
  • You may be able to negotiate a lower purchase price and acquire one of the top plots. Getting in early can result in you paying less for construction costs.
  • Personalisation – When you buy property off-plan, you will often be given a variety of fittings, upgrades and improvements to choose from, allowing you to personalise your property with your own style and touch. With this, you are given the freedom to choose your own desired fixtures and fittings, including flooring and walls, as well as potentially your own say on furniture and appliances, allowing you to customise your new property to your specific tastes and style.
  • Not subject to buyer beware – When buying a new home, you aren’t subject to the same buyer beware as you are when buying an existing home. If you buy off-plan and discover structural flaws, you may be entitled to sue the developer for the fair and appropriate costs of repairing them.
  • Simpler and convenient – Buying off-property is usually a simpler buying process and there’s no need to redecorate – also there’s very little upkeep and maintenance necessary within and after the development – making the process more convenient.
  • 10-year guarantee – the majority of off-plan properties come with a ten-year guarantee, ensuring that your home is constructed to an agreed-upon quality, giving you the ease of mind.
  • Off-plan property comes with a builder’s warranty.
  • Many off-plan properties provide buyers with help-to-buy equity loans.

Disadvantages of buying off-plan property

  • Potentially costly – You may wind up paying more for your home than it is actually worth if the value of your property lowers between reservation and completion time. This could be seen as a risk that may put some buyers off purchasing off-property, though it is not a common case.
  • Application – When you apply for a mortgage, your lender might want to value your home twice: once when it’s under construction and again when it’s finished and reached the stage of completion. If the value of the property has increased or decreased during that period, it may have an impact on your mortgage application.
  • Reapply for a mortgage – Mortgage offers typically last six months, so you may need to reapply if your property endures construction delays. If the value of your home rises dramatically, it may impact your mortgage offer.
  • Can’t be sure on the completed look – You can’t be certain what your finished property will look like because it’s not easy to visualise exactly how it will look.
  • Could face long wait time – When buying property off-plan, you may have to wait a long time between deciding to buy a home and actually moving in upon completion. This wait could potentially be up to a year or more, contingent on where development is in the construction stages.
  • Lack of lenders – Most lenders do not provide mortgages specifically developed for off-plan properties, therefore it can be potentially difficult to find a lender for you to arrange a mortgage.

Potential limitations of buying off-plan property

  • Another potential limitation of buying off-plan is that if you are unable to complete the purchase due to mortgage problems, you may lose your deposit.
  • If you are not able to complete a purchase of the property for whatever reason, the developer could be able to sue you. You will also lose a reservation deposit.
  • The developer might even try to persuade you to hire their conveyancers for inspection, which could be bad as it reduces the reliability.

Questions to ask when buying an off-plan property

It is always best to carry out research on the actual process of buying off-property, the area you plan on buying, and the developers you are going through, when purchasing off-plan-property. Here are some questions you should ask when buying off-plan.

Is there much potential for a deal?

Developers are frequently prepared to negotiate a deal, especially at the beginning of a development project when they must sell properties to support the project’s continuation.

Investors and cash purchasers who purchase many houses and multiple residential properties often receive the best deals on off-plan properties. However, if you’re purchasing a property with a mortgage for yourself, there is still a great opportunity for a deal to be made.

Because help-to-buy houses are generally in great demand, negotiating can be more difficult, but it’s always worth a go.

What is the developer’s reputation?

It’s best to look into and research the developer’s reputation and past projects before buying to check whether the properties they have developed are as they say they will look. Their reputation depends largely on customers’ opinions, so have a look at client reviews and customer satisfaction levels to get a grasp of their reputation and reliability. Looking at previous development photos online is also a great idea too.

Can I see my property before completion?

You’ll want to ensure the property is completed to a high quality before you finish and take possession, whether you inspect it yourself, travel to the site with a surveyor to check it out, or hire a snagging conveyancer.

You should inquire with the developers about the process for obtaining confirmation that the property you’re buying is in steady development and up to the mark.

Will there be estate management charges?

A lot of new-build property estates are privately owned and run by residential companies, which means that the owner will be responsible for maintaining communal areas, which might pose issues for residents.

Is there protection set up?

Consult with your property lawyer about the developer’s insurance to protect you if they go bankrupt or fail to complete the project to be certain you are protected properly.

Is buying property off-plan cheaper?

If you can negotiate a good deal with your developer – perhaps even a bargain! – purchasing off-plan might be less expensive than buying on the open market for an existing ready-built property.

Early buyers can sometimes receive considerable offers and excellent discounts for being interested in and wanting to pursue a property purchase for a house at the beginning of development, therefore timing is important when it comes to getting reduced property prices.

If you are interested in buying off-plan property and are looking to do so with a trustworthy and reliable developer, Salboy can help you out with all things property. We deliver first-class, top-quality developments without compromise. We can let you know all about our reputable and quality business before construction, as well as offer additional and attractive discounts – to find out more, get in touch with Salboy today