Is "Off-Plan" a Good Plan?
- AuthorNick Fielding
An "off-plan" property refers to a property that is sold before it is completed or even constructed. Essentially, buyers purchase the property based on the design or plans, rather than the finished product. In other words, the property is bought "off the plan" of what will be built in the future. Buying a new build property "off-plan" can be a smart investment for those looking to own a brand-new home with modern features and energy efficiency.
In this blog, we'll outline some pros and cons of buying "off-plan" and provide some helpful questions for you to ask.
Buying Off Plan Pros and Cons
- Personalization: One of the main advantages of buying a property "off-plan" is that buyers have the opportunity to personalize their new home to their exact specifications. This means that they can have a say in everything from the layout of the rooms to the fixtures and fittings used. However, this level of personalization comes at an additional cost.
- Lower initial cost: Buying a new build property "off-plan" often comes with a lower initial cost than purchasing an existing property. This is because developers may offer discounts and incentives to buyers who commit to purchasing a property before it is completed. However, there is always a risk that the value of the property may decrease before completion.
- Reduced maintenance costs: As new build properties are constructed using modern building techniques and materials, they typically require less maintenance than older properties. This can save buyers money in the long run on maintenance costs. However, this benefit may be offset by higher service charges and management fees.
- Energy efficiency: New build properties are built to modern energy efficiency standards and often feature energy-saving technology such as double-glazed windows, insulation, and solar panels. This can lead to lower energy bills for the homeowner. However, the cost of installing these technologies is often passed on to the buyer.
- High quality fixtures and fittings: When purchasing a new build property "off-plan," buyers can often expect high-quality fixtures and fittings throughout the property. This can include things like state-of-the-art kitchens and bathrooms. However, this benefit is not guaranteed, and some developers may use lower quality materials to save costs.
- Warranty and guarantees: New build properties typically come with warranties and guarantees that can provide buyers with peace of mind. For example, many developers offer a 10-year NHBC guarantee on new build properties in the UK. However, buyers should check the terms and conditions of these warranties and guarantees to ensure they cover what they expect.
- First occupant: When purchasing a new build property "off-plan," buyers will be the first occupant of the property. This means that they will not have to worry about any hidden issues or problems caused by previous occupants. However, as with any new property, there may be teething issues that need to be addressed.
- Investment potential: Buying a new build property "off-plan" can be a good investment opportunity. If the property market is strong and the value of the property increases before completion, buyers may be able to sell the property for a profit before they even move in. However, there is always a risk that the property market could decline, and the value of the property could decrease.
Questions To Ask When Buying A Property Off-Plan
If you are considering buying off-plan, make sure you do your research first. Here are a few questions we recommend you ask the developer before you agree to anything:
- What will happen to my deposit if the developer goes bankrupt? Make sure your deposit is protected.
- If the property's value drops after the exchange, what will be the consequences for my mortgage offer? This could affect your mortgage offer so it is important to be clear.
- Can I review the planning consent for the property?
- If it's a leasehold property, can I buy the freehold?
- Can I see the lease? If it is a leasehold property make sure you go through the lease with your conveyancer as soon as possible, paying particular attention to the length of the lease, ground rent and other charges, and any restrictions.
- Will there be any estate management fees, and what will they cover? Many new build estates are being privately managed, which means the owner will need to pay to maintain shared spaces and playgrounds.
- Where and when will the detailed specifications for the property be available for review? Ensure you understand what you will be getting, in detail. Ask to see plans and detailed specifications as soon as possible. Ask your conveyancer to ensure that anything you require is set out in the contract.
- Is everything included in the price, or will I need to pay extra for fixtures and fittings?
- When can I see the property before completion? Whether you want to look at the property yourself, get on site with a surveyor to check the place over or get a snagging surveyor in, you’ll want to re-assure yourself the property is finished to a good standard before you complete and take ownership. Ask what the process is for getting re-assurance that the home you are buying is up to scratch.
- When is the expected completion date, and what happens if it's delayed? Your property may be part of the first phase so check how long you could be living on a building site.
Find out more: Buying Off-Plan: Tips for a Hassle-Free Experience
If you require further advice regarding purchasing an off-plan property, or any other property, please contact Chattertons' Residential Conveyancing Department or Land Developments and New Homes Team.
Whilst every effort has been made to ensure that it is correct at the time of first publication it may not be updated, even if the law changes. It is not intended to be specific legal advice and cannot be relied on as such. Chattertons are not responsible for any action taken or not taken as a result of this blog.