Buying Property Off-Plan or Ready to Occupy New Builds
Buying a property is a lifetime achievement for many people, but with so much choice – from off-plan developments, to ready to occupy new builds and period properties – it can be a hard decision to make.
The UK property market is currently thriving, and market trends have seen an increase in demand for new build properties, boosted by the Government bringing forward its Help to Buy scheme’s property reservation deadline by two months to October 2022. New data from Savills shows regional reservations for new builds were up 41% on Q1 2019 in the first few months of this year.
Further to this, the National Association of Property Buyers predict rising interest in off-plan city centre apartments to spark record demand in 2022, with increasing numbers being sold to first time homebuyers rather than investors.
This is because there are plenty of opportunities that come with both buying off-plan property and ready to occupy new build properties, particularly in the current climate. Here, we delve deeper into the advantages for first time homebuyers and property investors alike.
Buying Off-Plan Property
Off-plan property refers to homes that the property developer has yet to finish building. An off-plan purchase could mean buying when the building is still in its design and planning phase or a near-completed project awaiting its final touches.
As with any home purchase or property investment, there are risks associated with buying property off-plan. But, if you’re buying in a property market where prices are increasing, such as now, there are also many benefits that should be considered.
Current market trends reflect this, with the National Association of Property Buyers (NAPB) predicting the number of homes sold off-plan to rise sharply over the course of 2022 as property prices rise, led in particular by city centre apartments.
Recent NAPB data shows that in 2021, 37% of new homes sold in England and Wales were sold off-plan, representing an increase from 35% in 2020, indicating huge consumer confidence in the UK property market post-pandemic, but why is off-plan rising in popularity?
Great potential returns
One of the main reasons for this increased demand is the fact that buying property off-plan allows homebuyers to secure property at a current market price, meaning that between putting down a deposit and completion, the value of the property could increase.
At present, UK property prices have been increasing month-on-month for some time, and in many areas of the UK, they are hitting record highs with Property Price Predictions for 2023 continuing this trend. This is particularly the case in towns and cities that are currently undergoing extensive regeneration, such as Bracknell and Slough.
This means that off-plan investment has the potential to generate a good return in terms of increased property value, meaning you have equity in your property before it’s even completed.
Choice of Apartments
Buying property in off-plan developments offers much more variety in terms of available units for sale and opens the door for buyers to secure the best option within a residential development to suit their wants and needs. Buyers have a wider choice of properties and location within the development the earlier they reserve.
Off-plan property investment is also popular because of the appeal new apartments have with renters and the potential return on investment for buyers.
Smoother Purchase Journey
Important particularly for first-time homebuyers, buying off-plan apartments substantially reduces the chance of the deal falling through, which is a huge benefit to those wanting a smoother purchase journey. This is because there is a formal agreement to purchase the property in place with no upwards chain to consider, meaning the risks and obstacles associated with buying pre-occupied property no longer stand in your way.
Before buying off-plan, you should research the property developer, their reputation and their previous developments to get an idea of the quality of their property portfolio. A reputable property developer will have examples of how their properties for sale match up with brochures and previous CGI’s used to promote the development, and case studies detailing stages in construction.
Ready-to Occupy New Build Property
In contrast, ready-to-occupy properties are those that are already built and are ready to move into. Naturally, this is appealing to homebuyers who are eager to move in as soon as the purchase is complete, and property investors who want to generate immediate rental income on their investment.
There are many advantages to buying ready-made property, with the ability to view the property in person before committing to it being a substantial benefit to homebuyers. This enables the buyer to make a more informed decision on their investment and eliminate any doubts.
With location and local amenities being an important factor in any purchase decision, buying a ready to occupy property allows prospective buyers the chance to scope out the area, it’s public transport, shopping and leisure experience and much, much more.
Maintenance and Energy Efficiency
Buying a new-build property also means that it’s less likely to require the same level of maintenance that an older property would typically require. New builds are often built with better insulation than period homes and are required to meet higher government standards when it comes to energy efficiency, with ratings readily available. This ultimately helps to reduce living costs for homebuyers as well as prospective tenants and has proven to be a considerable factor in purchase decisions in recent years, with a recent Knight Frank survey showing that 86% of respondents rated energy efficiency as either “very important or important”.
Financial Help on New Build Property
In recent years, interest in buying in new property developments has been increased by government schemes such as Help to Buy equity loans and First Homes, which are only available to first-time homebuyers on new build properties.
As property prices rise, these schemes are attractive opportunities to get onto the property ladder and have helped drive the increased demand in new build property across the UK significantly, particularly as the Government announce the closing date for Help to Buy applications.
Buying Property: What to Consider
With any property purchase, homebuyers should consider not only the immediate benefits but have a long-term perspective as well.
Location is key to any property purchase, whether off-plan or ready to occupy, and areas with strong investment focussed on regenerating the local area, such as Slough and Bracknell, help minimise risks and increase potential financial returns. It’s important to consider this for the long-term, as the local area will impact property prices moving forward. A prime example of this is the Crossrail opening in Slough, which has seen the value of property in the area increase by an impressive 77.2% since the project was announced in 2008.
SevenCapital is a trusted property developer that specialises in urban regeneration, and providing high quality apartments in London, Birmingham and in the South East. Find out more about us or view our previous property developments.