While it isn’t as straightforward as traditional home-buying, off-plan purchases are becoming increasingly common. With the continuous advances in technology, most off-plan developments will be able to provide computer-generated imagery (CGIs), so you can see what the finished product is likely to look like, and the financial advantages of such an investment can often outweigh any uncertainty.
Purchase Prices are Much Lower than Market Value
The biggest advantage of buying a property off-plan is the ability to secure the purchase at below-market value. Quite often, this is due to developers wanting to demonstrate a certain level of sales prior to marketing the development. To do so, it is not uncommon for some developers to offer additional discounts for investors purchasing multiple properties at any one time as an added incentive, so you save more and make more.
Secure the Property With a Small Deposit and Spread out the Payments
Depending on the developer and the property type, some off-plan deals have the added benefit of staged payments. Starting with a minimal payment of a 15% deposit to secure the property and a small reservation fee which is typically £2,500. By doing this, you can split the payments into the respective phases of development. These payments can help spread the cost of the purchase and enable you as an investor or as someone planning to live in the property to purchase it without a significantly large deposit. If you have used a mortgage to purchase this you will see your money beginning to work for you, increasing in market value upon completion. Off-plan developments often come with assured income thus making this even more worthwhile.
Your Property Increases in Value upon Completion
Those who purchase property off-plan benefit mostly from house price growth. If a property is purchased in 2019, but isn’t due for completion until 2021, when the property has finally been built, they will have seen their property grow in value each year. This can add tremendous value to a property, especially if it has already been purchased at a discounted price from the outset allowing you to maximise on the investment.
Ability to Re-sell at a Profit Before Completion
As an investor, you can choose to put the property up for sale and sell at a higher market value. If you sell before completion, you don’t pay the stamp duty, the owner at completion does. This can be a good strategy for those looking to make a profit quickly. However, you would see much more of a capital growth benefit by tenanting the property and also gaining the benefit of a regular rental income, in addition to capital growth.
Here at Flambard Williams, we work closely with reputable developers who have built a strong reputation for providing high quality developments with a proven track record to ensure the security of off-plan investment. If you would like more information, please get in touch to speak to one of our Invest specialists today.