What is off-plan property?
Off plan property is a property before a structure has been constructed. The development is either not yet underway but the plans are in-place and ready to go, or is currently being built.
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Process of off-plan property planning permission:
Below are the 5 major stages of planning permission associated with off-plan property:
Stage 1: Planning permission varies across local planning authorities
Stage 2: Planning permission application sent off
Stage 3: The local planning authority may hold consultations as they decide whether to grant permission
Stage 4: The authority decides whether they’re in favour of the plans. If so, it will proceed. If not, they have to give a valid reason
Stage 5: Planning permission is granted. Although there may often be a few conditions to meet standards, the development now has permission to start being built
Benefits of buying off-plan property?
Below are some of the main benefits associated with buying off-plan property:
Benefit 1: You can purchase the off-plan property below market value. This is because the developer will be keen to sell as many of the properties prior to completion
Benefit 2: Increase of property value once built. It is likely that there will be an increase over the course of the development being constructed, especially after being purchased at a discounted price
Benefit 3: Ability to secure property with a small deposit and staged payments. Not all developments offer this, but most do, meaning it can help spread the cost for you
Benefit 4: If the area has a strong rental demand then you can earn a second income and also reap the rewards when you come to sell the property
Risks of buying off-plan property?
Below are some of the main risks associated with buying off-plan property:
Risk 1: There is no immediate income for buy-to-let purchases, as the property will need to be built and furnished before it can be tenanted
Risk 2: Inexperienced builders and developers. Make sure you work with builders who have a good track record and a portfolio of developments they can show you
Top Tip: Let solicitors hold exchange deposits so if anything goes wrong your money is refunded back to you
Risk 3: Issues with the constructor may mean they go out of business before the property is complete, leaving you unable to recover any funds transferred
Risk 4: The finished property may not meet your expectations
With a number of pros and cons of investing in off-plan property, it is important that you look into the risks and research to see how you can mitigate them. If you can work with experienced builders and be prepared not to see a return until the property is completed and tenanted, you will reap the rewards in the long-run.
If you’re interested to learn more about off-plan property, view our latest developments here.