Purchasing a property before it is built – buying off-plan – can be an effective way of saving money and securing the best investment prospects in a development.
One of the benefits of buying off-plan property is the fixed price, which is why the purchasing method could soar in popularity over the coming year as people look for more financial certainty.
This is one of the reasons cited by Jonathan Rolande, spokesman for the National Association of Property Buyers (NAPB), after it released its latest findings and predictions on off-plan purchases.
The company expects the number of homes sold off-plan to rise sharply over the course of 2022, led in particular by city centre flats. The firm predicts that sales figures will surpass the previous high of 47% of new-build properties sold off-plan in 2017.
Buying off-plan: the stats
Looking at data from property portal Rightmove, the NAPB points out that in 2021, 37% of all new properties sold in England and Wales were sold off-plan. This is a small rise from 35% back in 2020.
In terms of property type, 24% of new-build detached properties were sold during the planning or construction phase – which constitutes buying off-plan – last year. This is an increase from 21% in 2020. The rate for semi-detached in 2021 was 33%, while for terraces it was 45%.
Buyers of these unbuilt homes paid a record £1.1bn in deposits in 2021, showing the huge confidence in the stability and strength of the UK housing market post-pandemic.
Rolande comments: “The lockdown blip has seen the numbers sold off-plan reduce but we expect these to rise quickly to match and overtake the previous high of 47% in 2017.
“Buyers love the certainty of fixing a price on a home at today’s value, no matter what the market does in the future during construction.”
New-builds appealing to more people
One new trend being noted is older buyers part-exchanging family homes for smaller new-build properties. They, too, are often drawn by the pricing certainty that comes with buying off-plan.
Rolande adds: “Older buyers often take advantage of part-exchanging the family home for a brand new apartment or smaller, more manageable house. The PX process gives guarantees unavailable in the ‘standard market’ eliminating viewings and fall-throughs.
“But buyers shouldn’t forget that new-builds are premium products and are priced accordingly – there is often better value to be had in the second-hand market.
“Buying off-plan is a decision made out of a mix of personal preference and necessity. Very often people commit early because they simply cannot find what they want elsewhere thanks to the incredible shortage of property coming to the market.”
Should you invest in off-plan?
The NAPB points out a range of pros and cons linked to an off-plan property investment. As with any major purchase, thorough research and gaining impartial advice are always recommended before you commit.
One of the downsides for some is that high-quality, new-build properties may come with a premium price tag. New-builds generally sell for more than existing local homes. Another factor to consider is any potential delays to completion, which need to be factored in, particularly in the current climate.
Sometimes, new-builds also come with faults and snagging issues. If they are part of a large housing development, it could also mean living on a building site for a while until all the homes are finished.
However, one of the major benefits to this style of buying, says Rolande, is that you can secure the property at today’s price. As house prices in the UK continue to climb, this is a highly appealing prospect if you choose the right area and investment.
You can also get a good deal if you get in early. Buyers are often dealing direct with the developer or marketing agent, who can sometimes offer early-bird discounts, for example. You can also get your pick of the properties available the earlier you get in.
Fall-throughs are unlikely when buying off-plan, because you have a formal agreement to buy. It is less likely to be affected by a broken chain. What’s more, you get all the benefits of a new-build home, which tend to be more eco-friendly, premium properties.
BuyAssociation specialises in off-plan, new-build properties direct from the developer, as well as existing property stock. Get in touch today to find out more about our investment opportunities.
