Buying off-plan is a popular way of buying property, especially for investors and first-time buyers. What does off plan mean? It basically means purchasing a property based on a set of architectural drawings and plans from the developer. A deposit is paid, with the balance due when construction is completed, usually after 18 months to two years, which is when your mortgage repayments will commence.
Property developers offer off-plan discounts for reasons such as:
– by getting buyers to commit to a property before it’s even built, means they get better rates of interest on development loans from the lenders and investors and reduce the risks of losing on their investment
– usually they need to sell a quota in each phase before the lenders/investors release more funds to continue the next phases of the development
– they won’t need to worry if the properties will sell once the development is finished
– can mean they can move onto building other new developments quicker
Buying off-plan has many advantages, for example:-
- Discounted prices (as high as 10-15%!) so potentially significant capital growth potential
- You can take advantage of rising house prices as the price is fixed at the beginning of the development’s life, so by the time the development is finished (over months/years) it is likely to have increased in value – but beware , as if prices go down, you can lose out!
- Can be a cheaper way to get on the property ladder as you can stagger the amount of money you need to pay out, for example, once the deposit is paid, then the time you spend waiting to move in can be used to save for the other expenses of moving in (i.e. removal firm, furniture, stamp duty etc.)
- Investors can cherry-pick the most attractive units for resale, especially if they aim to sell it straight on when built rather than renting it out.