Buying off-plan – how to make a good investment

8th February 2017

It takes a brave person, with a lot of trust in a developer, to part with hard earned money and invest in a property that has yet to be built – yet the rewards can often far outweigh the risks.


Many people see this as the best way of making a return on investment as the property has not yet accrued any profit.  The demand for off-plan properties remains high, with as much as 10 to 20 per cent return from a 10 per cent deposit.


Property consultant, Tony Freeman, looks at the areas to consider when purchasing off-plan:


Research – It’s crucial to find the right development in the right location. It may seem obvious but an area with a high crime rate and popular with burglaries is probably not the area of choice to invest in.


Price – Look at other similar properties in the area. If the market values are depreciating it may not be a wise investment. If on the otherhand there’s a sense that the area is on the up then it may be a wise investment. Primelocation and Zoopla are useful resources to help with your research when looking at property prices in the area you wish to buy.


Location – Location is key when choosing an off-plan property and if you plan to rent it out then it needs to be near good transport links and commuting to the city / town with good amenities nearby such as supermarkets, coffee shops, bars and parks. .


Market – You must research who your market to determine the type of property to buy and whether you plan to let or sell the property on completion. Discuss this with local estate agents to understand where the demand is likely to be coming from. It’s also sensible to establish how many other units have been sold to buyers planning to let them out upon completion, as your property could end up competing with a large number of other properties in the same development.


Profit – It is difficult to estimate the return you will potentially make as there are many external factors that could potentially effect the price your property could sell for, such as government changes to taxes such as stamp duty or changes to the economy as a whole, but if you’ve invested wisely your return should be greater than your initial investment.


Be ready – Often there is great competition when a popular development is looking for investors so being ready in advance will help secure your property.

Ensure you arrange the appropriate finance for the purchase well in advance. Developers usually require a reservation fee of between £500 and £1,000. This is not the deposit, but will show to the developer you are serious and would like to purchase off-plan but without stumping up the full deposit.

Tony Freeman
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