You may have heard the term ‘off-plan’ when it comes to property.
But what does it mean and how does buying a house off-plan work?
We’ve got all the answers right here…
What is off-plan property?
When you buy a property ‘off-plan’ you’re buying it from a developer before it’s been built.
Purchasing a property that’s in the process of being built, but not finished, is also considered buying ‘off plan’.
How do you buy an off-plan property?
Buying a property off-plan is a slightly different process to purchasing a home that’s already built.
Here, we’ll guide you through the process of buying off-plan…
1. Speak to a mortgage broker
The first step in any home buying process is to speak to a mortgage broker and find out if you can borrow what you need for your dream home.
A broker will be able to advise on the best kind of mortgage for you and will have access to more of the market, so you can find a mortgage product that works for you.
2. Take a look at developments online
Take a look online for either ongoing developments or new projects that are about to begin in the area you’re keen to buy in.
Explore the plans for the whole development so you can get an idea of the kind of site you could eventually be living on.
If you see something you like, contact the developer and arrange a site viewing and more details on the property you’re interested in.
3. Establish what you’d like and reserve your property
Once you’re certain you’d like to go ahead with your off-plan purchase, you can reserve your plot with the developer. The reservation fee is usually around £1,000 but can vary.
At this stage, you may also be able to choose certain fixtures and fittings, as well as things like flooring and any white goods.
Make sure your developer is clear on what you’d like so there are no hold-ups later in the process.
4. Appoint your solicitor
Once you’ve reserved your property, appoint a solicitor or conveyancer to do your legal work.
Your solicitor will be able to liaise with your developer’s solicitor and your mortgage lender to help ensure the process of buying your off-plan home runs smoothly.
5. Complete your mortgage application
Once you’ve reserved your property, it’s time to complete your mortgage application ahead of you exchanging contracts with your developer.
Your lender will offer you a mortgage and this will probably be valid for six to nine months.
6. Exchange contracts
The exchange of contracts between you and your developer can happen quickly with an off-plan purchase – often within a month of you reserving your home.
Your solicitor will be able to ensure everything is taken care of during the exchange process, which makes your purchase legally binding.
You’ll also pay your deposit at this stage and your developer should commit to a ‘long stop’ date.
This means if your property is not completed by a certain date, you’re able to request a full refund of your deposit and walk away if you wish.
7. Snagging your new home
The wait between exchange of contracts and you being able to move into your new home can be many months while your property is built.
Once your home is ready, you’ll be invited to undertake ‘snagging’. This is where you inspect your new property and highlight anything you’re not happy with or that isn’t finished to the standard you’d expect.
It can be worth bringing a surveyor along to do your snagging if you’re not confident, as they’ll be able to highlight any issues your developer will have to fix before you move in.
8. Completion and moving-in
After your snagging issues are dealt with, you’ll complete your purchase. Your developer will agree a date with you to move in and they should also give you a further period of time to highlight any additional snagging issues once you’re living in the property.
Pros and cons of buying off-plan
As with any kind of property purchase, there are pros and cons to buying off-plan.
You should consider the following before committing to an off-plan purchase.
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Pros of buying off plan |
Cons of buying off plan |
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You’re buying a brand-new home |
It can be hard to visualise exactly how your finished property will look |
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You may get to choose fixtures and fittings |
Mortgage offers generally last six months – so if your home is delayed, you may have to reapply |
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Your property may rise in value between reservation and when you move in |
If your property drops in value between reservation and completion, you may end up paying more than your home is worth |
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The property will come with a builder’s warranty |
Your lender may want to value your property when you apply for a mortgage and then again when it’s completed. If it has grown or dropped in value during that time, it could affect your application |
Can you negotiate off-plan prices?
You should always negotiate with a developer when buying off-plan, just as you would if you were buying an existing property from a seller.
Developers will usually be open to negotiations on an off-plan property’s purchase price at the start of a project, as they’ll be looking to secure funding to continue the development.
Even if your developer is unwilling to do a deal on the purchase price, they might be open to covering all or some of your stamp duty costs or upgrading some of the appliances that come with your home.
Is it cheaper to buy a property off plan?
Buying off-plan can be cheaper than buying on the open market if you’re able to secure a deal with your developer.
Early buyers are often offered attractive discounts for committing to a property at the start of a development, so timing can be key to securing a lower purchase price.
Further reading…
For first-time buyers, stamp duty rules can sometimes be confusing – we’ve outlined everything you need to know about the property tax in 2021.
And if you’re considering a Help to Buy equity loan to help fund your first property purchase, check out our guide to the scheme.
If you’re thinking of buying a bungalow, meanwhile, there are lots of things you’ll need to consider.
