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Your 13-point checklist to buying off-plan properties as an investment

A comprehensive checklist for buying off-plan properties that covers everything from property investment must-haves to hidden off-plan opportunities

17 January 2024
4 minutes read
New homeowner holding in front of their front door the keys to their forever family home on their left index finger with the little house keychain resting on their palm

Firstly, by definition, buying off-plan properties is purchasing a property – typically an apartment – in advance of its completion.

Off-plan properties are usually sold before the construction stages actually begin, at a significant discount and often with smaller deposit requirements to that of other properties.

As investment strategies go, investing in off-plan properties can be one of the most profitable. But, of course, this is the case only when it’s done properly. Once you read this article and follow the 13-point checklist, then you’ll know exactly how to increase your off-plan investment profits.

If it’s the first time you’re considering the investment in off-plan properties, we are aware it can be intimidating. But let’s just say you’re purchasing at a very early stage (this is when you’re most likely to get the largest of discounts and the best choice of a plot) – there may not even be a show home service for you to visit just yet.

Therefore, it helps to be well educated and organised from the get-go. This 13-point checklist will outline the essential steps for investing in an off-plan property and explain in detail the advantages of buying off-plan and how to make the most of them.

1. Do your research!

Firstly, do rigorous research. You need to make sure you understand as much as you can regarding why off-plan properties can be so profitable.

So, you should start by considering all of the risks and then acknowledge how you could lower the effects these may have on your investment.

2. Find and locate the top areas to buy off-plan properties

When purchasing any sort of property for investment purposes, whether it is an off-plan property or an existing one, if you don’t buy in the right location you won’t maximise your profits.

Believe us, it pays off to do all the research you can in the early stages and ensure you're buying within the correct locations.

3. Work with a good property company, not a sales agent

Let's face it, sales agents are always going to come and go. Their job is simply to sell the property for the developer. On the other hand, a dependable property company works with a developer, but for you, the investor.

So, make sure you're working with a trustworthy and reputable company with a long and successful track record of helping property investors such as you make fruitful off-plan purchases.

4. Strictly buy from developers that protect your money

We’re talking about your money here! With off-plan purchasing, you pay an early deposit to secure the great investment, but you deserve to have some security over this money, right?

You always need to make sure that your deposit is protected by some client money protection scheme because until it is complete and you have keys in hand, there is never an outright guarantee that the investment will complete. Long story short, protect yourself.

5. Understand developer risk to a high level

Ask the questions! What are you planning to do if the developer goes bust before completion? No clue? Then ask, in what ways can I be protected?

By doing so you’re growing your awareness towards further risks and cementing solid backup plans to ensure your investment doesn’t fall back on you.

6. Know your rights when it comes to the developer being late in finishing construction of the property

Late completion of the construction works can severely dampen your investment plans. So, you need to be prepared by understanding clearly what happens if the development does face delays.

Find out at the early stages, as soon as you can if you have rights to compensation, and what you should do about your mortgage.

7. Have a back-up plan for your loan

Now, as your property moves closer towards the completion stages, the lending rules and the individual lender criteria can change. To give you just one example of many: property prices may temporarily fall.

There are several different situations that could cause your lender to withdraw a mortgage offer, and you will need to know exactly what to do if this happens.

8. Acquire a good solicitor

We’re talking about the law and your rights here! It’s absolutely essential that the contract between you and the developer protects both you and them. You need to be clear and be aware of if the contract allows the developer to change particular specifications, alter the completion date, increase the price… the list goes on, but you get the idea.

This can’t be done on your own, hence why you’ll need to hire a great solicitor who is experienced within this field and is clearly aware of the potential risks of purchasing off-plan properties. A good solicitor will make you feel safer and provide you with essential confidence and know-how moving forward.

9. Make a Plan B (and C) in case your life changes

As we all know and may have been through, unavoidable life events can easily stop you from getting to the completion stages successfully. These might include losing your job, urgent emergencies and falling into bad health.

So, it’s really important to completely understand all the options that are open to you, alongside how to deal with particular life events as you progress towards completion.

It never hurts to have a plan from the beginning about what you will do if one of these may occur. That way, if something does happen you’re not adding the stresses of your investment to the stresses of the sudden change in your life. It's better to be safe than sorry.

10. Check if you can sell before completion

Developers might not allow you to sell before completion.

You might be asking, why would they do this? Should you actually purchase off-plan properties where no resales are allowed? Think about it.

11. Get your solicitor to check the contract a second time

This is key. Ensure that before construction is complete, your solicitor double-checks the final contract again.

It is extremely beneficial to do so just to ensure no material changes have been created that you were not previously made aware of.

12. Check on the development and monitor it regularly

This particular style of investment is a large commitment on your part and you’re therefore placing a lot of trust in the developer. It’s a sensible practice to make sure that the project is on track be completed on time. If you can visit the site, do so whenever possible. You will be able to record the current status of the project each time you do visit.

If, on the other hand, you can’t visit the site personally, you should have someone experienced and aware of the specifications of the development visit for you. It’s ideal that this individual is not only experienced in the progression of developments but more, in particular, experienced with off-plan properties and communicating effectively with developers.

Ultimately, the property company you’re working with should do this for you, so ensure from the beginning, just before you sign the contract that this is going to be something that’s allowed on a regular basis.

13. Work through a snagging list at completion

Finally, as you approach the final exchange and before this occurs, make sure you work through a snagging list with the developer and ensure all outstanding issues have been dealt with by the developer. It’s as simple as that.

Ufuk Bahar, Founder and Managing Director of Urbanist Architecture
AUTHOR

Ufuk Bahar

Urbanist Architecture’s founder and managing director, Ufuk Bahar takes personal charge of some of our larger projects, focusing particularly on Green Belt developments, new-build flats and housing and high-end full refurbishments.

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