An off-plan property is an apartment or house for which there are plans, but no building. The dwelling could also be half-complete or even finished, but can’t be lived in yet (perhaps because other apartments in the building are still being worked on).
The reason many property investors consider off-plan properties is because of the impressive discounts that can be had. Developers obviously want all the apartments or houses in the development sold, and if they can sell some early by providing a discount, then it’s a win-win situation. Great deals can sometimes be achieved when the investor sells the apartment for more than it was worth when he or she bought it (i.e. it was valued at £180,000 pre-build, but has gained £20,000 in value over the year it has taken to complete it).
Another reason it pays to buy off-plan is because you can often get the pick of the development i.e. the corner flats, higher up apartments with the best view etc.
Befriend estate agents in your locality. They can usually tell you how much property is selling or renting for in particular areas. They will also be able to pinpoint the popular areas or let you know if there is any local regeneration planned. Look at the council’s planning meeting minutes (these should be available online) to find out if any developers are planning builds.
What to look out for
- Just as if you were purchasing a traditional buy to let, make sure the location of the off-plan property appeals to your target tenant (or buyer, if you intend to flip it i.e. that it’s a popular area where property doesn’t tend to stay on the market for long).
- Remember that it’s going to take a long time before you generate any money from your investment (if you’re considering buy to let). You’ll also have the costs of furnishing it to think about at a later stage).
- Do your due diligence on the developer. The last thing you need is for the company building the apartments to go bust halfway through the project, when you’ve already paid your deposit and a couple of instalments. On that note, make sure deposits are held by solicitors so that you can get some of your money back if the worst happens.
- Be prepared for the fact that the apartment may actually fall in value (although this is unlikely considering the housing crisis in the UK today).
Here at Sourced, we have a network of investors, landlords, buyers and developers. Having decades of experience in the UK property industry, we are also familiar with the negotiation techniques called for in purchasing an off-plan property. In addition, we can put you in touch with financial advisers who can give you information on the purchasing side (traditional lenders won’t provide mortgage finance for a property which hasn’t yet been built). We have been sourcing off-plan property for years and are confident we can find your next off-plan investment property for you. Why not call us today for a chat?