Purchasing a property ‘off the plans’ is the act of agreeing to purchase a property before the build has been fully completed.
Developers and agents will provide general information, such as computer generated images and floor plans to give you an idea of what the finished product will look like and you will have the chance to review these thoroughly before committing a particular unit.
Sales can be agreed anywhere between a couple of years to a few months before the developer has completed the site.
Purchasing property in this way is common in areas where the demand for new properties is high and investors are speculating that the price of the land will increase.
Developers will look to offer discounts to buyers in order to incentivise them to agree to purchase a property during the build phase. As a sourcing agency will usually seek to agree between 10% – 20% discount against the end prices of individual units, although investors can sometimes secure even higher reductions.
Obviously this will also benefit the developer too, as they will have guaranteed sales in place and can build out the development with increased confidence.
It is not only savvy investors who buy off plan, homeowners will also commonly buy property in this way, so as to secure the best apartments or houses within a specific development and grab a bargain.
Aside from discounts, developers may also be willing to offer extra incentives such as free flooring, kitchen appliances and parking spaces, although this will vary per development.
Off plan buyers are highly valued by developers so they are often willing to negotiate to get the deal done!
Investing early will also give you the opportunity to personalise your property, with a selection of finishes often being offered by the developer.
Everything from upgraded plug sockets, to higher quality kitchen and bathroom units can be altered within the design to suit your personal tastes.
One the deal is agreed, you’ve essentially ‘locked in’ the agreed price and can relax whilst the build commences. In areas of high capital appreciation, the asking prices at completion can be significantly higher as the market value of the properties increases during the months or years during the build.
The off plan purchasing process is relatively straightforward and we’re here to guide you throughout.
Developers will usually expect a small commitment of £1,000 – £2,000 up front, known as a ‘developers deposit’ which will hold the property whilst your solicitor works through the contracts.
You will then exchange contracts on an agreed amount, usually between 10% – 50% of the agreed purchase price minus the developer deposit which the developer is already holding.
This will only happen once your solicitor is completely satisfied and has reviewed all the relevant documents provided by the developer.
In the following months, buyers will receive regular updates and also be invited to visit the development to keep an eye on the progress.
When the site is nearing completion, we’ll approach mortgage buyers and get applications underway. Surveyors are usually happy to value properties months before they are officially completed. You’ll simply select a standard BTL mortgage product, as you would with any other property.
Mortgage offers will usually last between 3 – 6 months so once this agreed, buyers can simply wait until the site is officially signed off and both parties are ready to complete.
Letting agent’s often get to work marketing the property in advance of completion so that tenants are ready to move in within the same week.
You will then start to see your returns immediately!
Jack Holland Prime Property Agents