Guide to Buying Off-Plan Property

If you have been looking to buy a new-build property, you may have been approached by the developers who offer you the chance to purchase off-plan. But what does off-plan mean when buying a property? We will take a look at what it means to buy off-plan, the benefits and drawbacks of buying off-plan properties, how this could affect your mortgage options, and more.

Table of Contents

What is an Off-Plan Property?
Can You Get a Mortgage on an Off-Plan Property?
Pros and Cons of Buying Off-Plan Properties
What To Ask Developers When Buying an Off-Plan Property
Buying Off-Plan Properties – Tips for Investors

What is an Off-Plan Property?

An off-plan property is one that you purchase before it has been finished, and in some cases, before the construction has begun. It is possible to get a lower price on an off-plan property than a completed one, usually 10-15% below market value during the early stages of development, hence the interest from buyers. 37% of buyers chose to purchase an off-plan property in 2024. The developers will present CGI models, floor plans and in some cases, an already constructed showhome on the site to invite potential buyers to look around and see what the completed properties would look like. They could even offer the opportunity to customise the build, with features and specifications that suit the buyer’s needs.

Off-plan properties are especially attractive to property investors, as they can often afford to wait for the property to be completed, as they aren’t buying it as their own home. Newly built properties also tend to have a high EPC rating and may come with a 10-year warranty, so less maintenance is required.

FAQ: What does ‘long-stop date’ mean?

The long-stop date is the date that the property should be completed when you are buying off-plan. If the property is not complete by this date, you can back out of the purchase and get your deposit back.

Can You Get a Mortgage on an Off-Plan Property?

Some mortgage providers may not offer a mortgage for off-plan properties, so you may be restricted in what mortgages you can get. Mortgage providers can be wary of providing funds for a property that hasn’t even been built, and the developer’s reputation may affect this. If the developer has a good track record of completing properties within the deadline and to a good standard, then mortgage lenders may be more willing to offer a mortgage on off-plan properties. Some specialist mortgage lenders do offer specific mortgage products for off-plan properties. Depending on the developer, they may already have specialist mortgage brokers and solicitors lined up who can help.

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Pros and Cons of Buying Off-Plan Properties

There are several benefits and drawbacks of buying off-plan properties for investors that you should be aware of.

Pros of buying off-plan properties

Buying a brand-new property before it is completed means you could get a say on the internal layout, fixtures and fittings and the overall design of the property. They may also come fully decorated, so there’s no need for you to do anything to get the property move-in ready.
Off-plan properties often come with a discount of up to 10-15%, giving buyers the chance to secure a property for a lower price. You could even see an immediate profit as the property’s value will increase from the sale price as soon as it is complete.
Purchasing a property directly from the developer means there is no chain, so you can get access to the property as soon as it is finished.
Like other new-builds, off-plan properties may come with a new-build warranty of up to 10 years.
New builds include the latest in energy-efficient technologies, appliances and building materials, meaning the property has a higher energy efficiency rating.
New build properties often require less maintenance and repairs in the first few years of ownership, making them ideal for property investors.
Payments for off-plan properties invoice a deposit, like other property purchases, and then a series of staged payments throughout the construction process, which can be more manageable for some buyers.

Cons of buying off-plan properties

There could be delays in the construction process, making it hard to plan ahead. This may be out of the developer’s control, such as adverse weather conditions slowing the construction process, or supply chain issues.
If you are funding the purchase with a mortgage, construction delays may mean that your mortgage offer may run out before the property is finished.
There are fewer mortgage options for off-plan properties, as some lenders may only offer a mortgage when the property is complete.
It’s always a risk buying a property that you haven’t seen, even if that is because it hasn’t been built yet. Floor plans and CGI renderings can give you an idea of the property, but you won’t know what it’s like until you get the keys and can see for yourself.
There is always the chance that the construction company or developer will go bust before construction is complete – make sure your deposit is protected if this should happen.
Developers may pressure you to use their conveyancers or solicitors – they may be representing the developer’s best interests, not your own.

Buying Off-Plan Properties – Tips for Investors

If you are thinking of buying an off-plan property, make sure you do sufficient research first. Check if the developer is reputable and how many other successful housing projects they have completed in the past. Find out what happens if the developer goes bust, ask to see the planning consent and full property specifications before putting down a deposit, and find out what exactly is included in the price such as wallpaper, carpet or turf in outdoor spaces. Find out when you can see the property before the completion of the contract and ensure you get a snagging surveyor in to do a pre-completion inspection of the property and make a report of any faults that need fixing. Use your own conveyancing solicitor and don’t let the developers force you into using theirs.

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