What is Off-Plan Property?
Investing in Off Plan Property is purchasing a property during the construction part of the building process. It’s usually purchased at a discounted price to the actual value of the completed state making it attractive to property investors.
Generally, the investor will need to pay a reservation fee and a deposit. The deposit can be anything from 10-20% and upwards of 30% depending on the developer and development.
Buying off the plan in the UK is a great way of ensuring a new build asset that can potentially rise in value during construction and deliver rental returns upon completion.
The Grand Exchange
Final Off-Plan Units Remaining
- Off-Plan Apartments – Estimated completion 2023
- At the centre of a £770 million Large-scale regeneration project changing the landscape of Bracknell
- Exclusive never seen before resident-only amenities
- 17.5% price growth expected by 2025 (JLL)
- Top location for London leavers – forecasting yields above 5%
Why Choose an Off-Plan Property Investment?
There are many reasons to consider an Off-Plan Property Investment. Firstly, property remains a flexible, rewarding and reliable asset in any portfolio, offering the opportunity to deliver two unique income streams.
This asset also offers incredible potential for long-term growth, more than you’d find in a traditional property investment. Because Off Plan requires an investor to purchase a property before it’s completed, there is always potential for surrounding property prices to rise, which would result in clear returns for the investor.
This also has the added benefit of providing an investor with a guaranteed new-build unit that they can hand-pick, provided they get in early enough. As far as flexibility goes in the property investment world, off-plan is unmatched in the different strategies it can be adapted to.
Benefits of Buying Property Off-Plan
For investors, there’s a number of benefits to buying Off Plan Property in the UK, particularly around the flexibility and potential of the asset:
Off Plan Property Can be Purchased Below Market Value
A major advantage of purchasing an off the plan property in the UK is that it is typically a lower price before completion. With the UK property market currently facing undersupply, there’s plenty of opportunity for demand to drive the value of a property up during the build.
Purchase Specific Units
Another attraction to an Off-Plan property is the freedom of selecting your preferred unit. If you’re happy with the location and developer, you usually have the choice of a specific location, features, rooms and much more. Furniture packages are also available for those looking to quickly kit out their home hassle-free.
Guaranteed New Build Apartment
Of course, Off Plan properties are new or refurbished builds. This guarantees a contemporary build which benefits from modern features such as energy efficiency, environmentally-friendly specifications and other requirements that new builds have to apply to. This generally leads to cheaper bills for tenants and potentially higher rental prices going forward.
View Our Off-Plan Developments
Risks of Off-Plan Property
As with any investment, there are elements of risk and that’s why it’s very important to go with a property developer that is trusted.
Firstly, it’s important to know the developer working on the project. Research the developer and ask the questions; How many developments have they completed in the past? What are their building standards for these completed projects? Are they financially stable?
There are also external factors to be aware of before making a property investment such as property values falling. This could affect lending on the property meaning your deposit will need to be higher.
Ensuring you also have guarantees on your property such as SevenCapital’s 10-year structural guarantee is vital and you should always check to see if it’s included in the contract with your developer. This could protect you against defects that may occur when you complete on your property.
Should You Invest in Off-Plan in 2021?
When investing in Off-Plan Property, there’s typically two objectives it can help with – rental returns and initial capital growth – both of which can be achieved depending on the location and type of property.
Buying Off-Plan property has a slightly different initial process to buying pre-tenanted or pre-built Buy-to-Let properties but comes with its own unique advantages and benefits, particularly if you’re investing to maximise returns over the long-term.
With a number of locations demonstrating excellent potential over the next five years in the UK market, as well as the UK’s currency forecasting similarly exceptional growth, should you invest in Off-Plan in 2021?
Download Your Free Off Plan Property Guide
In the ‘Off-Plan Property Investment Guide’, you’ll find the following plus much more:
Making Money Out of Thin Air – We break down why more and more investors are choosing Off-Plan property and the benefits it can provide in a portfolio.
How to Build an Off-Plan Portfolio – Our exclusive five year plan details how you can build a thriving portfolio in just five years, built on a foundation of Off-Plan property.
When to Buy and Sell Your Off-Plan Properties?
When to buy and sell your Off-Plan properties is all down to personal choice. Many people choose to sell the property once it’s completed, reaping the rewards of capital growth during the build process which may take a few years. SevenCapital’s Off-Plan Past Performance has demonstrated as high as 30% growth over the build process.
Others choose to rent out the property achieving higher yields and creating sustainable capital growth over many years. Rental yields vary depending upon location, purchase price and demand within the area.