Buying new homes off plan

UK property developers and builders sometimes sell all or part of a development before the building work is completed. The practice is known as selling "off plan".

This guide will explain to you what's involved in buying a new home off plan and covers some of the issues you will need to consider before you sign on the dotted line.

How it works

It may ease any worries that you have of buying off plan to know that the procedures involved follow a well-established system which will take you from initial perusal to final possession.

Usually a buyer will view the plans and drawings and pay a fee of between £500 and £1,000 to reserve a unit. This is generally refundable if the buyer pulls out within 28 days but once this time has passed the buyer will be asked to pay out a 10% deposit. Then it's a case of waiting while the development is completed, a period which, depending on the size, can be anywhere from 6 months to two years. When the project is close to completion the developer will give a guaranteed moving date and the balance owed will be paid on completion.

The benefits

• An excellent investment – In a rising market buying off plan can be an excellent investment. You buy at this year's prices and when you take possession the market value will have increased. The profits can be substantial.
• First choice – If you get in early you can often get the best plots or units, the one's with the most desirable positions and views, at the best price.
• It's a more personalised approach – Buyers are often given a choice of fixtures, fittings and interiors and on some developments the early buyers can have some input into how the property is designed.
• Prime location – All over the UK demand outstrips supply in prime locations and the off-plan route has become popular among buyers keen to get in early and pick up properties in the most sought-after places.
• First step – Making property more affordable in some areas buying off plan can be the best way for first time buyers to get a foot on the property ladder.

The disadvantages

• A slowing market – The market can fall as well as rise so there is an element of risk, which needs to be carefully considered.
• Delays – Developers will give a general idea of when the property will be finished usually to within a month or two. But if this becomes 3 or 4 months the buyers has little recourse.
• Lack of knowledge – It may be wise to enlist the help of a professional if you have little experience in reading of plans, maps, contracts and other professional documents.

Part-exchange Your Property

Some property developers are now offering part-exchange deals, enabling you to sell your existing home to the developer in return for a discount on the price of the new property you wish to buy.

This guarantees you a cash buyer and you don't have the worry of having to sell your house on the open market. It also means you avoid estate agent fees and can move without any hassle or delay. It also gives you more money to spend on any new items you need and you can plan your move.