5 Essential Questions to Ask When Buying Property Off-Plan for the First Time

09 Apr 2024

Purchasing off-plan property can be an exciting opportunity for first-time buyers in the UK. It allows you to secure a property at today's prices while enjoying the anticipation of watching it being built. However, buying off-plan comes with its own set of considerations and risks. To make an informed decision and ensure a successful investment, it's crucial to ask the right questions. In this blog post, we will explore five essential questions every first-time buyer should ask when buying property off-plan in the UK.

1. What are the developer's credentials and track record?

Before committing to buy property off plan, it's vital to research and evaluate the developer's credentials and track record. Look into their previous projects, their reputation within the industry, and any awards or accreditations they have received. A reliable and experienced developer is more likely to deliver a high-quality property on time, ensuring a smooth buying process.

2. What is the expected completion date?

Knowing the estimated completion date is crucial for planning purposes, especially if you're currently renting or have specific time constraints. Inquire about the construction timeline and any potential delays that may arise. Developers often provide an estimated completion window, so make sure you understand the associated risks and the possibility of your move-in date being delayed.

3. What are the payment terms and schedule?

Understanding the payment terms and schedule is essential to manage your finances effectively. Inquire about the deposit amount required and when it is due. Additionally, clarify whether there are any staged payments throughout the construction process. This information will help you plan your budget and ensure you have the necessary funds available at each milestone. 

At IP Global, we offer our property buyers Investment Returns Models for each development so that they can get a clear picture of their equity required and cash flow across a timeline. If you'd like to take a look at an example, reach out to us here, and we'd be happy to provide one.

4. What guarantees and warranties are provided?

Reputable developers often provide guarantees and warranties to protect buyers' interests. Inquire about the structural warranty, which covers any major defects that may arise after completion. 

Additionally, you can ask about the appliances, fittings, and finishes included in the property and whether they come with their own warranties. Understanding these guarantees will give you peace of mind and ensure you're adequately protected.

5. What are the associated costs and potential additional fees?

Buying property off plan involves more than just the property's purchase price. Inquire about additional costs, such as legal fees, stamp duty, and service charges. Additionally, ask whether there are any ongoing management fees or ground rent associated with the property. Understanding the complete cost picture will allow you to budget accordingly and avoid any financial surprises.

Discuss Buying Off-Plan Property with IP Global

Purchasing off-plan property can be a rewarding experience, but it's essential to ask the right questions to make an informed decision. By researching the developer's credentials, understanding the expected completion date, clarifying payment terms, knowing the guarantees provided, and considering all associated costs, you can mitigate risks and ensure a successful investment. 

Remember, knowledge is key when venturing into the world of off-plan property, and these five questions will serve as a valuable starting point for your journey as a first-time buyer in the UK.

Seeking to get involved in buying property off-plan? We can help make it an easily manageable and highly profitable addition to your portfolio. With a proven track record of over USD3 billion invested across 18 countries, we specialise in simplifying property investment for our clients. Learn more about our process and why we're the trusted partner for your real estate journey.

FAQs

An off-plan property is a property that is not yet built. It is sold to investors before it is completed, based on the developer's plans and projections.

Off-plan properties can be a good investment opportunity, as they can offer significant discounts compared to the price of a completed property. If you are considering investing in an off-plan property, it is important to do your research and understand the risks involved.

Please don’t hesitate to get in touch to request more information.

Here are some of the pros for investing in off-plan properties:

  • Potential for significant discounts: Off-plan properties can offer significant discounts compared to the price of a completed property. Developers are inclined to secure sales early to mitigate the risk of unsold units post-construction, offering buyers a chance to benefit from lower prices. Additionally, this approach enables developers to enhance their planning strategies in advance.
  • Potential for capital growth: Buying properties off-plan offer the potential for capital growth before they’ve even been built. The value of the property is based on the developer's plans and projections at the time of sale and as that time progresses and comparable property prices grow, you benefit from that growth until completion and beyond.
  • Early access to alterations: By buying a property off-plan, you may have the opportunity to influence finishes and propose final adjustments. This can be advantageous as it is more cost-effective than implementing these finishes independently on a new property.
  • You can plan ahead for occupancy: By securing a tenant beforehand, you can expedite the process of occupancy once the property is completed, ensuring a faster start to generating rental income.
  • You get a newly built property: Acquiring a freshly built property brings the benefit of modern building technology and materials. This can boost resale value and lower ongoing expenses such as maintenance and utility bills.

 

Here are some of the cons of buying property off-plan:

  • Delays: Completion dates for off-plan properties are often estimates and can be subject to change due to various factors like construction issues, approvals, or even bad weather. However, in certain contracts and markets, compensation may be available for construction delays, as seen in Germany. Explore why Germany stands out as our preferred European market for international property investment here.
  • Uncertain Quality: Since purchases are based on architectural renderings and specifications, there's a risk that the final product may not align with your expectations. Deviations in materials, finishes, or overall quality could occur, which could impact the property's potential resale value. That is why it is very important to ensure you thoroughly read the specification document in the contract and ask for clarity where needed. 
  • Developer Insolvency Risk: In the unfortunate event that the developer encounters financial difficulties or ceases operations before completion, you could face challenges recouping your deposit and potentially inherit an unfinished property. It is imperative you choose a developer with a strong track record - or let IP Global do the legwork for you, we do rigorous due diligence and iron out the legalities. To date, we have secured over 200 developments for our clients. 

Buying property off-plan can be cheaper for investors for a number of reasons. Staged payment plans, spread out over the construction period, ease the burden of a large upfront sum compared to a completed property. Developers also incentivise early purchases by offering properties at a lower price point than the anticipated market value upon completion. This allows you to lock in an appreciating asset at a discounted rate.  Additionally, these new builds often boast modern features and high energy efficiency, potentially leading to lower maintenance costs and utility bills down the line.

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