There are plenty of reasons to put down a deposit on an investment property before it’s even been built. When buying off-plan you might get to strike a good deal, secure the best plot or even choose the fixtures and fittings.
With the government’s Help to Buy scheme only targeted at first-time buyers of new builds, the trend for buying off-plan has been rising. So, if you’re looking at a desirable development in a prime location, you might need to act fast to have a chance of clinching your perfect investment.
There are issues to look out for when buying off-plan too. To help you choose the right investment, we have six tips to bear in mind in your negotiations.
What is buying off-plan?
Buying property off-plan is buying a place that has not yet been built. The only things you will have to go on are the developer’s plan. Although this way of buying an investment property might appear risky, it does have advantages.
In the early stage of a project, developers are keen to sell as many properties as they can and may give off-plan buyers attractive discounts on the purchase price. The cost of the properties usually rises once construction begins.
However, like any investment, buying off-plan needs to be approached carefully to avoid any pitfalls. These can range from a long wait before the property is complete to issues obtaining a mortgage, if you need one.
You will also need to pay a deposit to reserve the property, which you are likely to lose should you pull out of the sale before the completion date.
How to buy off-plan
The main thing when buying off-plan is to keep a close eye on the proceedings and do your research. Here are six recommended tips to help make sure your purchase goes smoothly:
Research the developer building the property thoroughly. If possible, avoid using a developer who is just starting out and has no history to check, and make sure the developer has adequate insurance to cover against failure to complete the development should financial problems arise.
As with any other property purchase, research the local area carefully too and any significant projects in the pipeline. Consider transport links, shops, amenities, leisure facilities, schools or other any other details to ensure the investment provides an excellent future return.
Keep an eye on the progress of the development. This means making regular visits to the development site to see how things are going and maintaining open communicatin with the developer.
Commission a snagging survey in the final weeks before completion to make sure there are no defects or annoying issues that may cause problems in the future.
Check on the finishing date. If your property is among the first to be finished, you need to make sure there will be proper access and minimal disruption caused by work to the rest of the site.
Make sure you use specialist solicitors, experienced in the legalities and processes of buying off-plan.
Mortgages and off-plan investments
If you need a loan for your buy-to-let investment, be aware that mortgage offers generally expire after six months. If yours is a lengthy construction project, you could find yourself without finance before you’re in a position to buy the property, meaning you could lose your deposit. Look for a mortgage lender with offers lasting at least 12 or consult a mortgage broker, experienced in off-plan investments.
‘Flipping’ is the name given to the practice of buying off-plan then attempting to sell at a profit when the development is complete. Investors planning to flip need to select their target developments carefully and buy as soon as they are released for sale. Flipping can be lucrative but be aware that it is risky too, should property prices fall.
Location is one of the most important things to think about when choosing a buy-to-let property. Both Wimbledon and Coombe, with varied local amenities and reliable transport links into central London, offer excellent opportunities for landlords looking to buy off-plan.
If you’d like to find out more about current and future investment property opportunities in the Wimbledon or Coombe areas, contact us today.