For some property investors, the idea of investing in off-plan property leaves them feeling rather nervous and in fairness that’s understandable. Off-plan property, by definition, is property which has not been completed, which means that, regulations or not, there is always the possibility that the developer will go bankrupt during the process and leave off-plan purchasers with neither money nor property.
On the other hand, if you choose the right developer, this risk is minuscule and the reward can be a high-quality property at a very affordable price. Here is a brief guide to the differences between investing in off-plan property versus resale property.
With off-plan property your first priority is the developer, with resale property it’s the location
If there’s one golden rule to investing successfully in off-plan property it’s to pick your developer with care. Basically, look for one which is financially sound, offers good customer service and ideally has a robust track record of delivering projects on time, on budget and to the sort of standard which makes buyers happy. While this may seem unfair, if you’re dealing with a new development company, you generally want to proceed with a bit of caution and do some digging into the background of the people behind the company.
If they have a track record of success in other areas, you may well be good to go, just be sure to check your facts first. One of the characteristics of a good developer is that they will only be developing property where there is a demand for it, hence they will already have done their research on the location (although you could certainly double-check it yourself). When you go for resale property, then, basically, you’re on your own when it comes to picking a good location and knowing what price to pay for properties within it.
Off-plan property offers a smoother path to purchase
In an ideal world, it would be as easy to buy resale property as it is to buy off-plan property, but in the real world we all know that resale-property purchases do not necessarily run smoothly, especially not when there are chains involved. In this context, it’s also worth noting that professional developers will generally have a realistic idea of what their property is worth and can be trusted to stand by an agreement rather than getting involved with gazumping. Sadly, this is more than can be said for some private sellers.
Off-plan property will be guaranteed to meet modern standards
Assuming you’re working with a trustworthy developer, you can reasonably expect your new property to be created to the best modern standards, in particular energy-efficiency standards which are now mandatory for residential buy-to-let property. In fact, buying off-plan property could quite feasibly give property investors a significant degree of “future-proofing” in the (far from unlikely) event that these standards are raised even further in the (near) future. On a similar note, you can also take it as read that fundamentals such as wiring and piping will be of solid quality and, crucially, will come with all relevant documentation to support the fact that they were installed by a qualified professional.