10 important tips when buying off-plan

Off-plan properties can offer significant benefits, in particular a greater potential for growth and profitability, buying at a low price before the property is even built.

These simple questions will help investors to choose the best options, at the lowest price.

  1. What does buying off-plan actually mean?

Off-plan property investment involves committing to a purchase before the property itself is built. The buyer has to be prepared to go ahead with the deal before seeing the final result, basing decisions on initial plans and brochures which show how the completed development will look like.

Reserving an off-plan property is one of the best way to secure a property for buy-to-let investors because of the potential to increase and to secure returns in comparison with their initial investment.

  1. What are the main benefits of buying off-plan?

Many buyers are attracted by off-plan developments with the expectation of a strong capital growth, which is one of the main financial parameter used to evaluate the success of a specific buy-to-let property investment, of course along with its rental return.

Entering into a deal before construction works are completed, and sometimes before works have even commenced, means securing the lowest entry price. Developers tend to offer lower purchase prices during the earliest stages of a project, attracting investors in such manner.

Buying among the firsts and securing a low price in an upcoming area, where a strong growth is predicted, gives a good chance that the investment will greatly increase in value, even before the development is ready.

Therefore, finding the right location where to buy is certainly a key factor in off-plan investments.

  1. How do I find the right location?

For buy-to-let investors, one of the main considerations is the strength of rental demand in the chosen area.

For instance, the most popular towns’ commuter belts, always attract huge demand from people who want to live within travelling distance but cannot afford city centres rental prices. Same principle applies in the most popular university towns and cities, where the student population is a vital and dependable source of tenants for landlords who have invested in buy-to-let property.

  1. How can I ensure the property is completed to the promised standards?

One of the best ways to gain peace of mind that certain quality standard will be met, is to invest in a development that is covered by a warranty that provides, for a definite period of time (generally from 2 up to 10 years), whole protection for the newly built home, should any problem occurs.

  1. How funds are safeguarded?

Any credible developer must ensure that investors’ funds are protected during the construction period.

Most off-plan property investment will require to make an initial down-payment to secure the property, stage payments throughout the construction works and the balance on completion. Percentage required at each payment date will be set within the sale and purchase agreement.

Funds are commonly allocated within on purpose accounts (Escrow accounts), ensuring that they are released towards the achievement of completed works throughout the stages of the build and not paid for works not yet carried out.

A good property developer should be transparent on the way the funds are managed and released to the contractors, and investors should be kept informed by means of regular monthly or quarterly construction updates, to monitor how and where the funds are being spent, the overall quality of the works, and that the construction is on schedule.

  1. How does the buying process work?

Buying an off-plan property is very straightforward.

Investors should make sure that the relevant sale and purchase agreement between themselves and the developer is designed to protect their own interests. In this instance, a proper legal advice could be sought. A solicitor may be useful in order to review the contracts and ensure greater protection to investors.

Is of the foremost importance to ensure that the chosen project has a greater chance of being delivered on schedule and therefore, to establish what legal protection is in place if the development is delayed. In addition, if there are stage payments in place, it is important to clearly understand what percentages are due during the construction works and when.

  1. How can I choose a reputable developer?

If you are considering an off-plan property investment, the experience of a seasoned developer could be a key factor in your decision to committing with the deal.

In fact, a reputable developer should have a portfolio of previously completed developments.

It may be therefore very useful to investigate in depth about their former activities, to see if they have sound records, and to visit their past projects as well as their current projects under construction, in order to ascertain the overall quality of existing buildings and interior finishing.

  1. How do I know the property delivery is on schedule?

With off-plan investments, timing is key and the sooner the property is built the sooner you can start earning from the property itself.

As said, one of the best ways to feel confident that the property will be completed and delivered on schedule is by choosing an experienced, and well established developer, which have previously respected their obligation in delivering projects as per the contractual terms.

  1. Who will manage my property?

If you’re buying an off-plan buy-to-let apartment within a new build development, an onsite management company is typically appointed to take care of the everyday maintenance.

A good property management company can also be in charge to find suitable tenants and to ensure that the property is properly maintained throughout each tenancy, allowing landlords to achieve a stable rental return from the property.

  1. What are therefore the main incentives of buying off-plan?

Off-plan property investments clearly offer a wide range of incentives for seasoned buyers.

In fact, those entering into a deal at the early stage of the project can secure the best units within the development, obtain outstanding discounts from the developer, and enjoy the strongest capital growth potential.

To help investors to source the best deal on an off-plan investment property, we use our well established net of contacts with reputable developers and real estate agencies worldwide, to identify the best projects, in the best locations, to maximise the return of your investment.

If you are looking for the best off-plan opportunities within our selected markets, contact us!

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