O is for Off-Plan | The Possible Upsides and Downsides to Buying Off-Plan
20 years or more ago, off-plan purchases were rare in the U.K. and solely the preserve of purchasers in the Far East, and a few property speculators in London. Now it is a firmly established mode of purchase and UK buyers are engaged fully in the method of sale, and the opportunities it may present.
Purchasing an apartment before it’s completed can feel risky. However, the right property can increase significantly in value after it’s built, making purchasing off-plan a financially sound decision.
The possible upsides
Buying off-plan lets you purchase property at a price that could be below its future market value and the principle has become a common place method of sale across the country; although London, due to the potential returns on capital and a strong rental market, is where most off-plan purchases take place.
It’s an ideal option if you want to resell the property once it’s finished.
In order to purchase off-plan property, you usually need to provide a deposit of just 10-20% of the property’s value, making securing the property simple and affordable.
Whether you plan to resell or live in the apartment, one of the biggest advantages of buying off-plan is selection. Unlike in completed buildings, you can usually select the ideal unit to suit your needs, tastes and budget when buying off-plan property.
The possible downsides
Buying off-plan property is far from risky, but it’s obviously not as certain as buying a new and completed or pre-owned property which you can ‘touch and feel’.
There’s also the possibility that the property you purchase doesn’t increase in value as much as you expected, or at all, during its construction.
To ensure optimum ROI, it’s best to look for off-plan properties that have been built by reputable developers, within areas with growing levels of investor demand. Developments near transport facilities always tend to do well and areas undergoing regeneration are sure to see an increase in capital value.
Working with a real estate investment specialist, with careful research into where to invest and which development is critical.
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