Go back 20 years and in the UK and just the preserve of investors in the Far East and a few land speculators in London, off-plan transactions were almost unheard of. It is now a deeply developed mode of purchasing, and UK buyers are thoroughly interested in the method of sale and the possibilities it may present.
It can feel risky to buy an apartment until it is done. However, after it is constructed, the right property will increase dramatically in value, allowing a financially prudent decision to buy off-plan.
Are you interested in purchasing a property that is off-plan? We will answer some of the most popular concerns property buyers have about the process of purchasing an apartment in this guide before it is ready to move in.
What Does “Buying Off-Plan” Mean?
In advance of its completion, buying an off-plan property means buying property, typically an apartment. Off-plan property is usually sold at a substantial discount before construction starts, often with a small deposit requirement.
Galliard launched six projects in and around London in July 2016, all selling off-plan, attracting a range of local buyers and overseas investors, particularly first-time buyers looking to grab one of the apartments starting at just £139,995. Purchasers were given the opportunity on the day to swap contracts, paying only a £2,000 reservation deposit, with a balance due within 21 working days of up to 10 percent. Especially common were developments such as Essex House in Brentwood and Atria and Skyline in Slough, located along the new Crossrail route, which is expected to provide investors with healthy returns in the lead-up to its launch in 2018/2019.
What are the Advantages of Buying Off-Plan Property?
London real estate prices are steadily rising, and while there is no guarantee that next year the homes or apartments worth £750,000 will be worth £900,000, London residential property has shown itself to be a safe asset class.
Buying off-plan allows you to buy property at a price that could be below its future market value, and the principle has become a common method of selling across the country. However, London is where most off-plan purchases take place. This is due to the potential returns on capital and a strong rental market.
If you intend to resell the property once it’s done, buying off-plan is perfect. You typically need to have a deposit of just 10-20 percent of the property’s value to buy off-plan property, making it easy and inexpensive to secure the property.
One of the greatest benefits of buying off-plan is selection, whether you plan to resell or stay in the apartment. You can typically choose the perfect unit to suit your needs, preferences and budget when buying an off-plan property, unlike in finished buildings.
Some developers would allow the contracts to be sold on a rising market, which ensures that customers will make a profit from the unit before it is completed by selling the contract to another entity.
What are the Disadvantages of Buying Off-Plan Property?
It is far from risky to buy off-plan property, but most developers are now providing a deposit guarantee for extra protection and peace of mind. However, it is obviously not as certain as buying a new and finished or pre-owned property that you can ”touch and feel”.
There’s also the risk that the property you buy does not increase in value as much as you expected or at all during its development. It is best to look for off-plan properties that have been designed by reputable developers in areas with rising levels of investor demand to ensure optimal ROI. Developments near transport facilities still seem to do well, and a rise in capital value is likely to be seen in areas undergoing regeneration.
The Public Opinion on Buying Off-Plan
Off-plan buying used to be considered risky, particularly during periods of weak or unstable economic performance. In the last 20 years, however, deposit guarantees and the consistently performing London property market have purchased off-plan property progressively more widespread to the point that it has become commonplace in the UK property market.
Leading property experts have recommended off-plan property as a smart option for optimizing your purchasing power and future return on investment. “In 2014, it was referred to by The Telegraph as ” a dead way of having more for your money.
Buying Off-Plan Property in London
It’sIt’s easy to buy off-plan property, especially with a large amount of development going on today in London. Off-plan sales are available for various residences, from condos to large family apartments and houses.
Where To Find Off-Plan Properties For Sale Online?
Take a look at our other property blogs and forums for more help and information. If you’d like help with a question relating to this article please contact us or leave a comment and we’ll try to answer that for you in a forum thread or blog post.