Most people will tell you that settling on the perfect property to buy is challenging enough. So, imagine having to weigh up whether a home really is the one for you, when it doesn’t even exist yet and going for it.
This is known as buying a property ‘off plan’, and it’s a lot more common than many would think. In fact, it’s grown in popularity in recent years, particularly with first time buyers.
So, how does it work?
What is buying ‘off plan’?
Simply put, to buy off plan means to purchase a property before it has completed construction – and in some cases – before building work has even begun.
It can sound a rather daunting and risky prospect, but there are genuine rewards to buying a home this way. The popularity of off plan property purchases has been bolstered by the government’s ‘Help to Buy’ scheme, a program intended to lift first time buyers onto the property ladder. The equity loan, provides would-be buyers with a loan of up to 40% of the purchase value of a home – which can be then used to boost their deposit and access lower mortgage rates in return. This element of Help to Buy is only available on new build properties, many of which will first go on sale before their construction is complete.
While you obviously can’t view the property as it’ll be, most big developers should be able to give you an idea of what to expect from your off plan property. Many will offer show homes for viewing, that are identical or very similar to any your interested in, so that you can get a feel for the space and even some décor inspiration. In the very least, they should provide a pack of computer-generated visuals and detailed floor plans that’ll give you a very clear understanding of what you’re buying.
It isn’t all plain sailing, though. You’ll certainly need to do your research, and there are some unique challenges presented by buying a home in this way.
How do I buy a property off plan?
There’s no single, rigid process you’ll need to follow when buying off plan. But for things to run as smoothly as possible, your next steps should follow something similar to the below:
Step 1: Research developments
Begin by exploring suitable developments in your desired area. If you plan on using the Help to Buy scheme, check that any developments you’re considering are eligible.
Step 2: Think about a mortgage
Speak to a mortgage advisor about your situation. Heed any advice they give you, and discuss what your options are. You may wish to go one further and acquire a mortgage agreement in principle (AIP). This confirms a mortgage provider is intending to lend to you, and will bolster your standing with developers.
Step 3: Make an offer
Once you’ve found your perfect off plan home you can make your offer. If successful, to hold the property while you get a mortgage in place, you’ll usually be asked to place a reservation fee – this could be as much as £1,000 and is usually non-refundable, so make sure you are absolutely certain that this is the property for you.
Step 4: Appoint a conveyancer
Your conveyancer will carry out the legal work involved in your property purchase once instructed. They’ll get to work checking everything is in order with the development as a whole, and your specific plot. When buying off-plan there is usually a deadline imposed by the developer meaning that you will have to exchange contracts within 28 days of agreeing the sale. It is therefore vital that you are as prepared as possible about how the conveyancing process works for new builds.
Step 5: Agree your mortgage
As this is all happening, agree your mortgage with a provider. If you intend to use the Help to Buy scheme, your provider will guide you through and facilitate this. The lender will then arrange for a valuation, based on the plans and specification of your property.
Step 6: Complete your paperwork
You’ll need to complete any paperwork with the help of your conveyancer within the timescales set by the developer. They’ll then facilitate the exchange of contracts and payment of the deposit.
Step 7: Plan your move
There’ll be two dates to bear in mind. The first, the ‘build completion date’, is when the developer expects the work to be completed and for you to be able to move in (this will only ever be a best guess). The second is the ‘long-stop date’, and is the date the developer expects to have the property completed by at the latest.
Pros and cons of buying off plan
Top tips if you’re buying off plan
Now you’ve got all that to consider, we’ve just a few more tips for you if you:
If you’re interested in an off plan property, you’ll need the services of a conveyancer, to help you complete the legal work. See what My Home Move Conveyancing can do for you, when you create a quote today >
Disclaimer: The article above is only a rough guide to give you some idea of the of what is involved with buying a new build property off plan.