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Questions To Ask When Buying Off The Plan

Buying off the plan is very popular and the rewards can be high, but there are pitfalls – these are some of the key questions to ask when buying off the plan:-

  • Are you really getting a true discount? Ensure you are really getting a true discount by making sure you know the real market value of the property before discounts/incentives – not the value a developer says it’s worth, but what a qualified surveyor says!  See the Regulated by RICS website for further information and also check the official sale prices of similar properties in the area using the Land Registry website. You can also check the local papers for a comparison of property prices in the area – if you find the property is over-priced, you can ask them to negotiate on the price!
  • Have you chosen the best available plot? A key tip for buying off the plan is to choose your plot wisely, a little extra space, a garden or an outward aspect (i.e. not facing internally into the development), can add thousands to the resale value.
  • Will your mortgage be in place in time? See a mortgage advisor early and ensure you are able to have the mortgage in place once the property is completed otherwise you risk losing your deposit, and know the time-frame needed to instruct that the mortgage is instigated for the right date.
  • Do you have a solicitor in place? Ensure you have a solicitor in place to start the legal proceedings after you have put down a reservation fee.
  • Have you sought independent professional advice? Another one of the key questions to ask when buying off the plan is to be careful of any complex financial set-ups that can be offered (i.e. bridging finance etc), especially by property investment groups/clubs, always get professional independent advice on any deal that will mean committing to any financial products, making sure you know the interest rate and redemption penalties.  Although cash-back incentives and low deposit buy-to-let mortgages can seem appealing, they may mean committing to a higher interest rate or penalty charges in the longer term.
  • What is the tenancy type? Confirm if the property is leasehold, freehold or common-hold, and thoroughly check any associated costs – maintenance/service charges and any ground rent charges which could add hundreds of pounds to your yearly costs.
  • How strong is the local rental market? If it is a buy-to-let investment, another one of the tips for buying off the plan is to make sure you have researched the local rental market to ensure the rent you can charge will cover the monthly mortgage repayments and all costs (including any maintenance or ground service charges!).  Some guaranteed rental yield incentives may just be camouflaging a poor rental market.  Check the property is in an area where there is a healthy demand for rental property and has not been flooded with excess buy-to-let investment properties – again you can ask the local estate agents and check the local papers.  Also if you are looking to let to professionals, check how close the local bus and train links are, or for families, that there are good local amenities such as shops and schools.
  • Does the developer come under the NHBC’s warranty? Check that the developer comes under the National House Building Council warranty or similar insurance to help ensure you are protected if something goes wrong with the developer/development before the property is built and afterwards.
  • Does the contract have provision for a pre-completion inspection? As you are buying off-plan and won’t see the property until it is built, it is important to make sure that the contract provides for a pre-completion inspection by your surveyor and a mechanism (both financially and practical) for dealing with outstanding ‘snags’.  This is a a thorough inspection carried out on the completed property to ensure the developer has completed their work to the required standard and to the specifications in the architectural drawings and plans – you don’t want to find you have less space or a lower quality of fixtures and fittings.
  • Do you have a named contact to liaise with? Try to keep regular contact with the developer throughout the construction to keep informed on the progress of the development and any changes in the time-frame which may affect when the mortgage is instigated.

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