Buying off-plan property means you purchase a home before it’s built. You commit to a property based on the developer’s architectural plans and designs instead of seeing a finished home. This strategy often lets buyers lock in a lower price and pick the best spots early.
In this ultimate guide to buying off-plan, we are going to look at the off-plan benefits and off-plan pitfalls of buying new build homes off-plan.
Investors and speculators are the main buyers of off-plan properties. These are individuals or firms who aim to profit from short-term price movements. They aim to profit from the property going up in value as it gets built and becomes less risky. Some first-time buyers also choose off-plan properties. They like the smaller deposits often needed at the start and the chance that the property will be worth more in years to come.
Buying off-plan isn’t complicated, but there’s a clear process to follow.
| Off-Plan Benefits | Off-Plan Pitfalls |
| Off-plan property can be cheaper Off-plan properties often come with a lower price tag than homes already built. This makes them particularly appealing to investors who want to maximise their return and get more for their money. Essentially, you’re buying a property at a reduced rate before it’s completed. | Construction delays Buying off-plan carries the risk of delays. Occasionally, new builds can be pushed back by months, which may: Affect your mortgage, possibly requiring reapplication.Lead to extra costs or missed rental incomeRisk losing your deposit if you can’t secure a new mortgage offer |
| New builds are in high demand from renters.Off-plan properties are brand new builds, which makes them highly desirable to renters across the UK. Tenants often look for new builds because they are modern and they have the appeal that no-one has lived in them before. | Property may differ from market expectationsVisualising a property solely from floor plans or computer-generated images can be challenging. The finished product may differ from expectations or developer assurances. Discrepancies can arise in construction quality or design. |
| More choice for investorsOne of the biggest perks of buying off-plan is choice. Investors get the first pick of the best units in a development: before anything’s been built. That means more control, better locations and a chance to snap up the most in-demand plots early. | Market value fluctuationsThe property market can shift fast during construction. If prices dip before the build finishes your property could be worth less than what you paid. A downturn can also make lenders more cautious and affect your mortgage options. |
Read our top 5 benefits of buying off-plan property
You can get a mortgage for a property still under construction, but it is not always as simple as buying something already built. Lenders tend to be more careful with properties under construction due to the risks such as build delays, valuation changes and the fact that you are buying something that does not physically exist yet.
Some lenders are more adaptable than others and a few even specialise in mortgages for properties under construction or new builds. Not every lender offers these, so it is helpful to use a broker to find the best fit. You might need a larger deposit and you will likely need to get the property revalued before completion. Mortgage offers also have a time limit; if your build is delayed, you might have to reapply or extend your offer. Getting an agreement in principle early and working with a broker can save you a lot of trouble later.
TIP: Start mortgage talks early and use a broker experienced with off-plan loans – it can save headaches later on.
When you buy off-plan, you will usually need to exchange contracts within 28 days of reserving the property. That is when the deal becomes legally binding and you pay your deposit which is normally 10% of the price. It is a fast-moving stage, so having a solicitor who knows off-plan thoroughly is important. They will check the contract, run searches and make sure your deposit is protected. Do not feel pressured to use the developer’s recommended solicitor. It is worth having someone who is fully on your side.
Because you’re buying before the build finishes, contracts will often include a “completion on notice” clause. This means the developer tells you when the build is done and you have a short window, usually 10 working days, to complete. A good solicitor will make sure there is a long-stop date too which is your built-in safety net. If the property is not finished by that date, you can pull out and get your deposit back. It is important to understand the terms, timelines and risks at this stage, with mortgage deadlines and the fact you will not have a full survey until later. Ask questions and get professional advice before signing anything.
For investors buying off-plan in the UK, Stamp Duty Land Tax (SDLT) is based on the agreed purchase price at exchange, not the property’s value when it is finished. This means any increase in value during construction will not push up the SDLT owed, which can be an advantage.
You pay SDLT on the price agreed with the developer, following standard rates, and first-time buyers can get relief on properties up to £425,000. Investors usually pay SDLT at completion, which might be years after buying. If the property’s value rises in the meantime, SDLT stays based on the original price so you could benefit from capital growth without extra tax. Remember there are other costs and risks, like reservation fees, deposits, delays or higher SDLT if it is a second home. Knowing this helps make off-plan buying a good move for investors willing to manage the details.
For example: If you buy off-plan for £200,000 but the property’s value rises to £250,000 by completion, you still pay stamp duty only on £200,000. This is potentially saving you thousands of pounds.
At Prosperity Wealth, the Pay Monthly Deposit Builder Plan makes buying off-plan investment properties more accessible. Instead of needing a large sum upfront you spread your 35% deposit over time – 5% when you reserve the property then the remaining 30% paid in 24 monthly instalments during construction. It’s a savings plan that helps you build equity gradually while locking in good property deals.
When the property’s ready you’ll be in a strong position to get a buy-to-let mortgage thanks to your built-up deposit. Or if you prefer you can complete the purchase with cash. This plan has helped many investors get started and even repeat the process with some securing multiple properties over the years – setting up a strong base for retirement.
Buying off-plan property is easy with Prosperity Wealth. If you’d like further information of any of our off-plan property developments and to understand how we can help you to grow your investment portfolio then you call us today on +44 (0) 121 237 4610 or email us at [email protected].
Prosperity Wealth has off-plan developments in Birmingham, Nottingham, Blackpool and Burton. View our latest property development investment opportunities.
Buying property before construction is complete aka off-plan property has several benefits. You can often get a lower price initially and the property’s worth may go up before it’s ready. There’s often a wider selection of units, no prior property sale needed and you can pick things like fixtures and finishes. New homes also have up-to-date features, better energy efficiency and a warranty which means fewer immediate repair bills. For investors buying off-plan, these homes are simpler to lease and can provide better long-term income.
