Is Off-Plan Property a Good Idea in 2024?

There’s growing demand in the UK market for new-build properties.

In recent years, the UK rental market has been characterised by a chronic supply-demand imbalance. This unmet tenant demand has kept property development attractive for investors, and new-build properties are on the rise.

This trend coincides with a record growth in 2023 of the build-to-rent sector. Many new build projects are being constructed with the specific purpose of renting units out long-term. If you’re looking for buy-to-rent properties, these kinds of developments are ideal.

With the renewed emphasis on new builds this year, especially build-to-rent developments, it begs the question – is off-plan property investment a good idea in 2024?

Off-plan is a type of property investment that involves investing in a property before it is completed. This can be during construction, or even earlier at the planning stage.

By investing in the development from the start, the unit can be acquired for less than the market price. For this reason, off-plan is a popular property investment strategy among savvy investors, and it can offer some of the best buy-to-let deals.

There’s rising demand for this type of investment in the UK due to the various advantages it can offer investors.

So why would an investor choose to invest in a property that hasn’t been built yet?

By investing in off-plan rather than a completed project, investors can take advantage of cheaper pricing and flexible payment plans offered by the developers. In recent years, mortgages have become more unaffordable, so off-plan has emerged as an alternative to the traditional method of acquiring buy-to-let property.

By investing during an early stage of development, buyers can benefit from capital appreciation when the property is completed, especially if the location has been identified as a hotspot for demand and capital growth. This means key major cities in the UK are usually selected for these developments such as property investment in London, or buy-to-let in Manchester

As the property will be brand new, there is likely to be high demand from renters who are willing to pay higher rental costs for a modern and stylish home. These properties often attract affluent young professionals as tenants.

Another advantage of new-built properties is that they are very likely to be more energy efficient than older properties.

Purpose-built student accommodation is also a popular property type when it comes to off-plan investment. Consistent rental demand and high rental yields are some of the advantages of targeting student tenants.

Investing in off-plan property is sometimes seen as riskier compared to investing in a completed property.

The reason for this is that as the building isn’t completed yet, it is possible that the completion date will be pushed back due to delays. There have also been cases when the developers have not delivered on certain specifications promised during the planning stages.

These disadvantages can be avoided by thoroughly researching the reputation of the developers and only working with companies that have proven track records and portfolios.

Another possibility is that the value of the property can dip during the construction period due to changes in the property market. In order to reduce the likelihood of this happening, it’s important to choose a prime location that has high potential for capital growth and research the best places to buy-to-let in the UK.

It’s also worth remembering that short-term fluctuations in the property market can occur, but in the long-term the UK property market has proved itself stable.

By choosing off-plan property, investors can be involved in some of the most exciting and cutting-edge projects on the market. In the current rental market, off-plan property is an attractive choice when it comes to investment, as rental demand and rental growth has sky-rocketed in the past few years.

A range of the latest developments can be found by searching online or by contacting property investment companies.

As mentioned, it’s important to be aware of the developer’s track record and past performance to ensure they will be reliable and trustworthy.

Another key step is to thoroughly research UK property hotspots such as buy-to-let property in Norwich and Exeter investment properties.