Buying off-plan is seeing a resurgence. New homes are becoming increasingly sought after among both local and international investors and as result more buyers than ever are considering this form of property purchase. A few years ago, local buyers were reticent where off-plan sales were concerned which was largely as a result of uncertainty in the market and the availability of already constructed new homes which were battling to sell during the recession. In the past two years however, as confidence has returned to the market, off-plan sales have flourished and of our current new homes sales, 40% have been off-plan.
In essence, selling homes off-plan comes down to three key elements: the quality of build, location of the scheme and confidence in the developer. Generally, developments in the right location are selling well, but confidence in the developer to deliver the end product as sold is key and so previous examples and end-of-build CGI’s are hugely important during the marketing process. Of the 866 apartments available in phase one of the Battersea Power Station redevelopment, 844 units or 97% have so far sold off-plan. The quick sale of these properties really does highlight that in London, location is everything. The redevelopment of the area and extension of the Northern Line has ensured that this is one area tipped as the next investment hotspot.
Meanwhile, at Ibex house in Wimbledon Park, SW19, we’ve so far sold 74% of the development off-plan, without any of the buyers even seeing the show apartment. The choice of studio, one, two and three bed apartments which start from £270,000 have been incredibly popular among buy-to-let investors, who like the ease that new build offers and the scheme’s location to Wimbledon Park underground station.
Other appealing aspects of off-plan sales include the option for buyers to sometimes incorporate bespoke changes such as a kitchen, bathroom or flooring of their choice; changes which are only possible in this early stage of the build. In addition, purchasing in the early stages of the development allows buyers to handpick the best plots and often there are incentives or discounts that can make it an even more appealing option.
Even with all the benefits however, some buyers tend to shy away from off-plan purchases as there can be a worry that the home sold might not in fact be the home delivered. In our experience there generally is nothing to worry about as the conditional exchange of contracts legally obliges developers to provide purchasers with a property as represented and sold in the brochure and plans given.
Buyers should be aware however that where off-plan sales are concerned, the completion date can sometimes change – often for elements beyond the developers control such as the inclusion of water, electricity and gas where they are reliant on outside suppliers. With most mortgage offers valid for between 3 and 6 months only, the completion date is very important. We find that most banks are usually happy enough to extend the original offer by another month or so, but if the completion date is delayed longer than that, the applicants may need to be underwritten again before another mortgage offer can be obtained. This would involve being credit checked a second time to ensure their circumstances and finances are still valid and they may need to provide up to date proof of earnings. In addition to this, if the mortgage product has a completion deadline, they will also need to ensure their chosen mortgage rate does not expire and that their mortgage valuation is still valid as these are also only valid for a set period of time.