Off-plan property put simply is where a developer has land with planned housing ready to be built upon it. As an investor/buyer, you are essentially buying and owning a new build which the developer has proposed. This comes with its own positives and negatives which any potential investor would have to consider or be aware of. It’s not an easy path and there could be problems particularly when it comes to obtaining mortgages. In this article, we shall guide any investor and outline how One Investments can mitigate some of the issues with buying property such as off-plan houses or off-plan apartments in London or Dubai.
What is off-plan property investment?
For an investor, off-plan can generate a huge windfall given the right development and the right developer. It is not unheard of that an investor can purchase an off-plan property at a low cost and once developed, that housing could be worth so much more. When purchasing off plan, there can be big discounting involved, particularly on securing the best land plots on offer at an early stage. Since any property is being developed, a buyer could also be allowed to make some custom changes to fixtures and fittings in the property. Be sure to budget for these extras when working out final costs.
Timings and locations are obviously important as with any property purchase. During a downturn, it might be a perfect time to take advantage of cheaper off-plan property prices. An investor, with the assistance of a trusted developer, would have to negotiate this. The location obviously has an impact. For example, the Crossrail train network in London is currently being constructed with new property builds proposed all near the vicinity of train stations. The investor would have quite a lot to do in terms of careful due diligence when considering any off-plan investment be that London property or Dubai property.
How to buy off-plan property?
An off-plan property purchase usually requires a sizable deposit being made (up to 30% typically) and the necessary paperwork being signed to secure the purchase. The developer will have this documentation and it is up to the investor to fully pay the rest of the investment upon completion and the developer needs to fulfil the build on time. Ask for a timeline schedule from your developer. This schedule must be adhered to by any developer since buyers are also protected by consumer codes and standards set by governments.
Off-plan mortgages typically only last six months with a variety of specialist lenders available on the mortgage market. It is up to the buyer to renew their mortgage throughout the duration of construction. First time investors should best seek advice from mortgage advisors where available.
For buyers, problems arise with mortgages, especially if the price of developed property dips. In the event of the property price decreasing, so does the security against the mortgage. The buyer would then have to think about supplying money for making up the balance. If the buyer has no option but to back out of the deal, this can lead to possible legal disputes in the event of the developer reselling the property for less.
It may also be possible to obtain an equity loan to help buy off-plan properties. For example, the help to buy scheme from the UK government. However, seek the best advice possible when it comes to financing your investment.
Off-plan building stage
Once the deal is secured; an investor is well on the way to owning a property.
Sometimes it can prove difficult to see what the end property would look like, especially from static floor plans, photos and image mock-ups. An investor should trust and work hand in hand with their developer to ensure that the construction is monitored.
An investor should consider making regular trips to the construction site and take pictures. Check the progress against plans and make sure that the development is moving to schedule. Be prepared to ask the right questions about the location and building work. Spot any defects and report them to be fixed immediately.
How One Investments can help
In summary, as with most property purchases, do your own homework and assess your needs to find the right off-plan property. There are risks but One Investments can advise and assure would be investors with their years of experience and excellent property portfolio.
One Investments has a great track record for delivering on time for its clients. We will present clear documentation and involve our clients in the construction, offering detailed plans of property and photos. Clients will have ready access to their own contact within our team, on hand to assist every step of the way.
So if you are looking at buying off-plan property in London or Dubai, speak to one of our helpful consultants today.