A Guide to Buying Off-Plan in the UK

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Table of Contents?

What Is Off-Plan Property?

How to Buy Off-Plan Property

Where to Buy Off-Plan Property

Buying Off Plan Benefits

Buying Off-Plan Risks

How to Sell Off-Plan Property

Off-Plan Property for Sale in the UK?

Introduction?

Off-plan property is one of the most popular types of investment property purchase in the UK, selected by investors from around the globe.?

What Is Off-Plan Property??

If you’re unsure exactly what off-plan property is, what off-plan means, and how off-plan properties compare to traditional residential homes, then this guide should help you understand this investment market.

In this quick and easy guide, we’ll explain off- plan in detail and help you understand more about this popular investment method.?

What Does It Mean When a Property Is Off Plan??

When a property is off plan, it means that it’s not yet complete. The property may still be under construction, or the development is still in the planning stages.

What Is Off Plan Property Investment??

Off-plan property investment is when a property investor buys a property before it’s been completed. The investor will be given a completion date that the development is expected to be finished by and will typically pay a reservation fee to secure the unit of their choice.?

Off-Plan Property Vs. Traditional Residential Property -

What’s the Difference??

There are some main differences between buying off-plan property and buying a traditional completed property. The most obvious difference is that completed properties are already complete and van be viewed in person and usually lived in before purchasing, while off-plan properties are not.?

Another difference when it comes to purchasing a completed property vs an off plan is that each property type is paid for differently. With the typical purchase of a completed property, buyers or investors will generally put a deposit down and pay for the remaining amount in mortgage repayments or a one-off cash payment covering the total property price.?

Another big difference between new build properties that are off-plan and older completed homes is that off-plan properties are a lot eco-friendlier. This is down to the materials the development is often made from. The fact that new-build homes offer better insulation reduces the need to use artificial heating, saving energy.?

Who Develops Off Plan Properties??

Off-plan property developers identify demand for property in a particular area and then build a new development to cater to this demand. The best developers to buy property off plan from are experienced and established in their field.?

Investors should avoid buying an off-plan property from any off-plan property developers who don’t have a strong track record of completed projects behind them.?

One of the main risks behind off plan as an investment is that you’re putting your money into something that isn’t yet complete. That’s why due diligence is so crucial, as you want to avoid investing in a property that may never successfully complete.?

How To Spot a Good Off-Plan Property Developer?

If you want to make off-plan purchases, you should conduct extensive research and due diligence into different off-plan property developers in the UK.?

Here are some top tips on things you should look for when researching good off-plan property developers for peace of mind that your investment is in the right hands.?

A track record portfolio of completed projects that were finished to a high standard.?

·??????A lot of experience in the off-plan development field.?

·??????A good reputation for customer care, evidenced by solid client reviews.?

·??????Press coverage on housing market news sites about current or past property developments.?

Where Can You Buy an Off-Plan Property??

If you’re looking to purchase off-plan property, you’ll usually need to browse websites of property investment companies.?

Property investment companies like us at Magnate Assets partner up with off-plan property developers and market their units in their latest developments on their behalf.?

Buy to let home buyers will invest in one or multiple units in each off-plan property, benefiting from below-market purchase prices, enhanced capital gains potential, and high rental yields in the right area.?

How Popular Are Off Plan Properties as Investments??

The real estate market in the UK has seen rising market demand for property over the last year, off-plan properties included. House prices have hit record levels, and capital growth predictions are as strong as ever.?

As an investment, off-plan homes can be ideal as they’re offered at below-market rates and are brand new when completed, negating any need for costly refurbishments.?

During 2022 when 38% of properties are selling over their asking price, according to the latest research from PropertyMark, the ability to buy a property for less than its listed purchase price is enticing for a lot of buy to let investors.?

Multiple new-build developments are available around top UK cities, so it’s clear that the demand for off-plan investment properties is very strong.?

How to Buy Off Plan Property in the UK?

While there are benefits of buying off-plan property as an investment property in the UK, the actual process of buying a new home can differ slightly from purchasing an existing property.?

When you buy property off-plan in the UK, there are certain things you should be prepared to do and some things you should expect during the purchase process.?

To help prepare you for your investment, here is some information on 10 of the most crucial steps to know when finding out how to buy off the plan property. Keep reading for some essential information on buying property off-plan in the UK.?

Make sure you know everything there is to know about buying off-plan property before you begin your property purchase.?

There are different questions you should ask yourself when buying property off-plan in the UK. Are you prepared to wait for your property’s completion date? Do you understand what an off-plan property is and the benefits of investing in a new build property? Are you willing to accept a slight delay in the completion of your property? And finally, are you happy to buy a property that you’re not able to take a complete physical tour of before you invest??

Think about your answers to these questions, and if you’re unsure about any of them, do some more research or speak to an expert before moving on.?

Know Where You’re Investing?

Do you know about the best areas in the UK to invest in off-plan property??

Understanding which cities and towns offer the best buy to let potential is paramount to your success as a property investor. Knowing this is one of the best ways to fully reap the benefits of off-plan investment.?

Research areas in the UK that have high rental yields, low purchase prices, and strong property market growth. Understanding the UK real estate market will help you know where to look when searching for your ideal investment and prepare you for any future purchases.?

Explore Different Off Plan Property Types?

Are you interested in buying a residential or student-off-plan property??

When buying UK property off-plan, there are different property types to consider. With off-plan investment in the UK, property investment opportunities vary between residential or student, and each comes with its own benefits.?

Let’s explore student vs residential off-plan property investment and look at the benefits of each property type.?

Student Off Plan Property?

Student off-plan property is a common investment type due to the UK student market being so in-demand.?

With so many university students in the UK, there’s a real need for suitable student accommodation, making this a great investment choice for 2023 and beyond.?

That’s why many off-plan property developers are creating stylish student new build properties in key student cities around the country.?

·??????Student off-plan properties are usually more affordable than residential homes.?

·??????Rental income from student properties can be significant.

·??????Demand for student property is high, especially in top university cities.

·??????Student Accommodation is difficult to get finance for, cash is the norm.

Residential Off Plan Property?

Residential off-plan property is an off-plan property that’s open to any type of tenant, whether a young professional, a young family, or a retiree.?

Due to the contemporary nature of new-build homes, young professionals are one of the most common tenant groups to rent off-plan properties in the UK.?

Most residential off-plan homes are developed in city centre areas, which is appealing to a younger demographic.?

·??????New developments attract a lot of rental demand from people living and working in the city.?

·??????Rental yields tend to be high for off-plan properties.?

Look at Finance Options?

When someone buys an investment property, using a buy-to-let mortgage may be their go-to method of paying for the investment.?

When buying off-plan UK property, using a buy-to-let mortgage is certainly possible, but there may be more obstacles for investors to cross to secure a mortgage offer.?

When it comes to getting a mortgage for off-plan property, you will approach this as you would with a completed property purchase.?

Speak to a mortgage advisor who will be able to connect you with mortgage brokers and be sure to mention that you’re looking to buy off-plan property so that they can offer mortgage brokers that specialise in this field.?

Some of the issues you could run into when you want to find a mortgage offer for an off-plan property include:?

·??????Many mortgages are valid for only six months. If your off-plan property takes longer than this to complete, you could need to reapply for a mortgage.?

·??????You could struggle to find a mortgage lender who specialises in or offers

off-plan buy to let mortgages.?

There are, however, some ways you could try and get around this. Get a clear picture of how long your property will take until it’s completed by finding out its expected completion date. This way, you can prepare your mortgage lender by letting them know when your property will likely be completed.?

Another option for financing your off-plan property investment is to pay with a payment plan. Many off-plan developers and property companies offer payment plans and allow investors to split the cost of an off-plan property into smaller, more manageable chunks.?

This means that instead of buying a property with an off-plan mortgage, those who don’t have the entire property amount right away won’t need to pay everything until the property is completed.?

Here’s an example of the payment structure for one of the off-plan properties sold at Magnate Assets.?

·??????Reservation fee of ￡5,000 to reserve your unit.?

·??????35% of the property price upon exchange of contracts.?

·??????15% of the property price by a set date during construction.?

·??????50% upon completion (minus reservation deposit)?

Depending on the length of time between reservation to completion, this option potentially leaves investors a lot of time to gather the funds to pay for their property in full.?

The added benefit of paying for your off- plan investment with a payment plan is that you don’t have to worry about any buy to let mortgage repayments.?

You can speak to our recommended finance by clicking?this link

Search for Your Ideal Property?

Once you’ve decided where you want to invest, the type of off-plan property you wish to buy, and how you plan to pay for your investment, you need to look for your perfect property.?

Magnate Assets specialises in off-plan property, and we have a wide range of attractive properties to choose from Cities across the UK and all come with City guides and development guides to explain everything.

Browse listings, download info packs, and read up on every piece of information available for different off-plan property investment opportunities.?

Request a Virtual Tour?

Some investors are put off from buying property off-plan in the UK because they’re not able to take a tour of the finished property before they buy.?

In recent years, however, companies have made the process of buying a property off-plan in the UK a lot more appealing with the help of virtual reality.?

Make sure you enquire about taking a virtual tour of your selected property to fully immerse yourself in the development with the help of VR technology and computer-generated imagery.?

Do Your Due Diligence?

Due diligence is the research that investors should do before making a large purchase.?

Due diligence is vital for any property purchase, but particularly buy to let. You want to make sure you’re not putting money into something that might not even follow through. The last thing all property investors want is to buy off-plan property and lose their money if the development doesn’t go ahead.?

Here are three questions you should ask and explore during the off-plan investment process.?

·??????Does the developer have a good track record??

·??????Has finance been secured for the new development??

·??????Does the property developer have positive client reviews and/or testimonials??

Reserve a Unit?

The process of buying off-plan property is very similar to the typical purchase process.?

Here are some of the main steps you’ll take when buying off-plan.?

·??????You’ll typically pay a reservation fee to ensure your selected unit isn’t sold to anybody else.?

·??????Your solicitor will carry out all the legal aspects of making a property purchase.?

·??????You’ll pay your deposit and exchange contracts.?

·??????You’ll be served notice to complete on your purchase by a specific time.?

Organise Legal Support?

Anyone who has ever invested in property before will tell you that one of the biggest top tips of buying an investment property is organizing good legal support.?

A good solicitor will help you get from A to B and finalise your property purchase, so make sure you do your due diligence in finding one that’s right for you.?

We partner with some of the best solicitors in the UK here at Magnate Assets. All of them are committed and experienced in dealing with off-plan purchases.?

Using a solicitor who has experience working on the off-plan development you’re investing in is often a good idea, as they may be able to help get you to exchange more quickly and effectively.?

See our recommended lawyers here –?Click Link

Exchange Contracts and Complete Your Purchase?

The last stage of your journey in buying off-plan property in the UK is to exchange contracts and complete your purchase.??This stage of buying off-plan means you’re officially buying your property, so it’s an important step.

The solicitor you appoint to help you with your investment will assist you with this, as will members of the team behind the development you’re investing in.?

With Magnate Assets, once you’ve completed your off-plan property purchase, you’ll be passed over to developers ‘agents’ post-sales team who are available to answer any questions and keep you up to date with the construction of your property.?

The Benefits of Buying Off-Plan Property?

While investing in off-plan in the UK is a popular property investment venture, many buy to let investors are still puzzled whether they should invest in off-plan property.?

So, what are the benefits of buying off the plan when investing in property??

In this helpful guide, we’ll look at five reasons why you should invest in off-plan property in the UK.?

Below-Market Prices?

Buying off-plan property in the UK is often cheaper than buying an existing property.?

This is because off-plan property developers will usually offer the property at a discounted sale price to try and entice new buyers. Properties in the UK can be found at more affordable prices that are below market value prices if they’re off-plan.?

Due to property market demand, buyers right now are struggling to find properties available to purchase for their asking price - never mind below. These affordable property prices offered by new build investments are a breath of fresh air for first-time buyers or buy to let investors with a lower budget.?

Why Is This One of the Benefits of Investing in Off Plan??

By choosing off-plan properties as an investment, you can buy a property in a desirable UK city for much less than you might pay for a standard property type.?

Let’s look at the Liverpool property market as an example. Zoopla house price data states that the average house price in Liverpool was ￡223,350 in January 2022 whereas properties like the Summit, a new build off-plan development located in the Baltic Triangle, were offering units to purchase for only ￡139,950.?

Property investors who make an off-plan purchase could save money compared to if they purchased an older property. The money they save could then be put towards another investment, helping the investor build their property portfolio more quickly than they would when buying property with a higher purchase price.?

More Freedom?

Another benefit of buying off-plan property is the freedom that comes with this investment type.?

Because these properties haven’t been finalised, investors can pick and choose the best units. For instance, investors can research the different units available and consider whether the dimensions and specifications suit their investment goals.

Suppose a property investor has a specific property in mind that they want to invest in, such as an apartment with a balcony or a spacious en-suite. In that case, the buying process for off-plan property will benefit them.?

Why Is This One of the Benefits of Investing in Off Plan??

Since the pandemic, more renters have started looking for homes to rent that feature specific attributes.?

By choosing multiple units within a development, you can select apartments with balconies or other desirable qualities like dedicated space to work from home or good city views.?

This could help increase demand levels for your investment property and make sure you attract your ideal target tenant quickly, making void periods less likely.?

A New, Modern Building?

New build homes are some of the most popular in the UK for both homeowners and investors alike.?

New properties have aesthetic benefits due to their fresh, modern designs. Those who favour a more contemporary look in their home, such as students or young professionals, are often drawn to stylish new build houses and apartments.?

Not only do new homes look good, but they’re also beneficial due to their sustainable qualities. Brand new homes tend to be built with more eco-friendly materials.?

Why Is This One of the Benefits of Investing in Off Plan??

Property investors need high rental demand for their venture to succeed. By purchasing a property considered desirable by their target tenant, interest from renters will be higher.?

Young people are now a lot more conscious of environmental issues than ever before. A massive 90% of Generation Z consumers have reportedly made changes to become more environmentally friendly.?

Increase your likelihood of high tenant demand and attractive rental yields by going green with off-plan investment.?

Enhanced Capital Growth Potential

When you buy off-plan property, you often need to wait many years until the development has been completed and is ready to be tenanted. The fact you must wait for the completion of a property that’s off-plan means that you could see the property value of your investment increase even before it’s ready to be lived in.?

Therefore, capital growth is often considered higher with off-plan properties, especially when the development is based in an area with increasing house prices.

Why Is This One of the Benefits of Investing in Off Plan?

When you invest in property, capital growth is something you always want to look out for. That’s why it’s a good idea to look for ways to increase your likelihood of capital growth as much as possible.?

If you invest in an off-plan property for a below-market price and then find that once the property is complete, a valuation discovers some impressive capital gains, this is a good sign that you’re in line for even more capital growth in the future.?

Remember to always research location when choosing your off-plan property to really get the most out of your potential capital gains.?

Staged Payment Plans?

Another major benefit of buying off the plan property is that you can split payments into separate stages.?

Property investors often don’t need to pay for the entire purchase price until the development’s completion date. A small deposit will be paid upon reservation, along with a percentage of the overall property price.?

Investors can then pay another instalment during the construction of the development before their final payment is made upon completion.?

Why Is This One of the Benefits of Investing in Off Plan??

Not every investor is lucky enough to have the total investment funds needed to buy a property straight away. Many buy to let investors seek out buy to let mortgages to pay for their investment.?

However, issues can sometimes arise with off-plan property due to most lenders keeping a mortgage application valid for just six months. After six months, you may have to fill out the application again if the property is not complete, which can be a hassle.?

Having the payments spread over multiple stages can simplify the buying process and mean you don’t have to worry about mortgage repayments further down the line.?

The Risks of Investing in Off-Plan Property?

With any investment, there comes a level of risk - It’s inevitable.?

Off-plan property, which involves buying a property before it’s completed, is considered a risky buy to let strategy by some.?

While off-plan does come with its potential risks, it also has many rewards that shouldn’t be missed out on.?

If you’ve been researching off-plan property as your next property investment venture, learn more about some of the most common risks of investing in off-plan property and some simple steps on how to avoid them

The Risks of Investing in Off-Plan Property

With any investment, there comes a level of risk - It’s inevitable.?

Off-plan property, which involves buying a property before it’s completed, is considered a risky buy to let strategy by some.?

While off-plan does come with its potential risks, it also has many rewards that shouldn’t be missed out on.?

If you’ve been researching off-plan property as your next property investment venture, learn more about some of the most common risks of investing in off-plan property and some simple steps on how to avoid them.?

Buying From Inexperienced Property Developers?

How to Avoid This Risk?

Avoid this off-plan property risk by carrying out in-depth due diligence before making any property purchases.?

Research everything you can about the property development company and the project in question. This includes looking for a track record of completed past projects, reading client reviews, and learning about who’s behind the development company.?

Due diligence is an essential stage of every property investment, so make sure you factor this into your off-plan investment strategy.?

Struggling to Pay for the Investment?

How to Avoid This Risk?

Did you know that it’s usually possible to split your payment into smaller chunks with off-plan property??

This is one of the biggest benefits of buying property off the plan. It rids the need for buy to let mortgages and helps investors manage the costs of owning an investment property.?

With Magnate Assets, you can split the cost of our off-plan properties into three manageable chunks of the overall purchase price.

Buying Off-Plan Property in the Wrong Area?

How to Avoid This Risk?

Again, your research is crucial if you want to avoid the risk of investing in the wrong area and seeing your returns drop.?

Research past housing market statistics for the property’s area and look at future UK property market growth predictions. When you buy a property in an area that ticks all the boxes as a buy to let hotspot, you lower the likelihood that you’ll experience a drop in property prices or rental returns with your off-plan purchase.?

How to Sell Off Plan Property?

With every property investment strategy, one thing always needs to be considered - the exit strategy. Whether you’re planning on holding on to your investment property for a long time or looking to sell at the first opportunity, it’s essential to think about how you’re going to exit your investment.?

If you’re considering investing in off-plan property for the first time, or even if you already have purchased an off-plan property, you may be thinking about your exit strategy for your off-plan investment.?

With off-plan properties differing from the typical completed home, many property investors feel unsure how to sell off-plan property and have general questions about the exit process of an off-plan investment. If this sounds familiar to you and you’d like to learn more about selling off-plan property and what’s involved, read this guide on how to sell a property off-plan in the UK.??

Selling Property Bought Off-Plan: What’s Involved??

Suppose you’ve purchased a property off-plan, and it’s now completed but you’re ready to sell it. In that case, the process of selling your property is about the same as it would be when selling any property.?

Most investors will have owned their off-plan property for several years before they look at selling. At this point, the buyer is free to do as they wish with the property as they have full ownership.?

The only exception is if they’re still receiving assured rental income for their off-plan property. This is a deal offered by off-plan property developers and tends to last for a period of one to two years.?

If the investor has owned their property for longer than the assured rental period, they’ll have the title deeds as ownership of the property. This means that they’re free to sell it through any sales agent or high street estate agent that they wish to use.?

At this point, the sale of the off-plan home would be classed as a standard property sale rather than an investment.?

Can You Sell an Off-Plan Property Before Completion?

Whether or not you’re able to sell an off-plan property before completion is mainly down to the property developer behind the project.?

When you buy a unit in off-plan property development, you’ll sign a contract that contains legal information regarding the purchase.?

If the property developer or the property investment company you purchased from stated in the contract that selling the property before completion is not possible, you’ll have to wait until the development is complete before you sell.?

Make sure you confirm this before you contemplate selling your off-plan investment property before its completion date.?

Should I Wait Until My Off-Plan Property Is Complete Before I Sell??

So, is selling off-plan property before completion even a good idea? Even if you can sell your off-plan property before it completes, there are downsides to doing this.?

One of the main benefits of off-plan developments is that they’re offered at below-market value rates.?

Buying the property for a lower amount means that by the time you’re ready to sell, the property’s value should have increased. This means you will miss out on huge potential capital growth returns when you sell the property before it’s completed.?

You also miss the chance to make rental returns from renting the property out to tenants. For this reason, it’s better to wait for a property to reach its completion date before you think about selling it to really get the most out of your real estate investment.?

When Is the Best Time to Sell an Off-Plan Property After Investment??

The best time to sell a new-build home is when the property’s market value has exceeded the initial purchase price.?

Rising market property prices are one of the most important things to monitor when you’re an investor. If property values throughout the UK property market are rising, those selling new-build properties will likely see better capital growth returns.?

Next to rental yields, capital growth returns are essential if you’re hoping to make the most of your off- plan property investment.?

If property market predictions are anything to go by, the best length of time to wait before selling your property is until at least 2026, when average UK house prices are expected to have risen by 20%, according to JLL.?