Buying property off-plan can be a lucrative way to start or continue on a property investment journey. It has a number of advantages over completed buildings and, if chosen well, can be a cost-effective way to safely and securely build a portfolio. When considering off-plan property, the most important thing to do is thorough due diligence on the developer who is building the site. Ensure that they have a good track record of securing good sites, have the necessary funding to complete the build, have proven successful sites behind them and are able to deliver buildings on budget and on schedule. It should be easy to find their previous developments – you can always check them out online or in person to see the quality and longevity of the works. A check on Companies House should reveal the financial standing of the company to ensure that they are solvent and successful.
Off-plan properties can be conversions or new builds, but once completed should always come with a 10-year warranty to cover any defects. A converted property will normally have a quicker build time as the main structure of the building is already there and normally it is a case of stripping out, re-fitting and refurbishing to create new homes. Even if the structure of the building is decades old, it will still have to pass modern building regulations before it is allowed to be passed fit for occupancy. Off-plan new builds can take advantage of the latest energy-saving building materials and methods to create homes that have many years of life in them. These efficiencies are far easier to build in from scratch and cover heating and ventilation, insulation, fixtures and fittings as well as the framework and materials used.
A developer selling off-plan will normally be able to offer a discounted price than when the units are completed. You can take advantage of these economies of scale by investing during the build period and buying something at below the full market value. During the build period some developers will offer interest on the funds you have invested as incentive to buy. This will normally be far more than just sitting in the bank. Whilst you won’t have any input into the décor and design, you should have been able to see a full proposal of all fixtures, fittings and features before you buy. Modern apartments now frequently come with concierge, gyms, cinema rooms and social spaces which all enhance the appeal of the development and make them more attractive to buyers and tenants. The more attractive the development, the higher the rental income is likely to be.
Solomon Investment Partners are experts in off-plan property purchases – they will be exhibiting at the Property Investor Show at London ExCel on 7/8 October 2022 on stand 330.