Off-plan property offers one of the best investment opportunities out there. But what is buying 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, this is the guide for you.
Designed for those questioning ‘what is off-plan property?’, 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 ready to be viewed in person and lived in before purchasing, while off-plan properties are not.
Another difference when it comes to purchasing a completed property vs an off-plan one is that each property 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.
With off-plan properties, it will often be possible to split your payment into separate instalments, with a reservation deposit at the beginning and the final cost paid when the finished property is ready.
Another big difference between new build properties that are off-plan and older completed homes is that off-plan properties are a lot more eco-friendly.
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.
The type of buyer that completes an off-plan property purchase usually also differs. First-time buyers will rarely buy an off-plan home unless they’re purchasing property under a shared ownership scheme.
Typically, off-plan properties usually are more popular with buy to let investors in the UK.
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Who Develops Off Plan Properties?
Off-plan homes are created by property developers. 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 the 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.
- 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?
So where can you find off-plan properties to buy? 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 RWinvest partner up with off-plan property developers and sell 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, ridding any need for costly refurbishments.
During a time when 32% 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 cropping up around top UK cities, so it’s clear that the demand for off-plan investment properties is not slowing down anytime soon.
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If you’re still wondering ‘what is an off-plan property investment and is it right for me?’ get in touch with us directly and a member of our team will be happy to offer guidance.
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