Buying off-plan: the pros and cons of buying a home before it’s built

·5-min read
Kate Williams and her husband Paul are downsizing from a five-bedroom home to an apartment due to be move-in ready in 2024  (Berkeley)
Kate Williams and her husband Paul are downsizing from a five-bedroom home to an apartment due to be move-in ready in 2024 (Berkeley)

Buying a property before it’s been built, or off-plan, has become increasingly popular in the last few years.

The National Association of Property Buyers found that in 2021, 37 per cent of all new properties sold in England and Wales were sold this way and predicts 2022 will surpass 2017’s previous high of 47 per cent.

“The demand for purchasing property off-plan has grown in recent years, due to factors such as favourable payment terms and staged deposits, which means there is potential for buyers to benefit from capital growth throughout the build programme and prior to paying the full purchase price on completion,” says Priya Black at Knight Frank.

But how does buying off-plan differ from a standard property purchase and what should off-plan buyers be aware of?

The appeal of a delayed move date

Kate Williams, 68, and her husband Paul, 70, have recently purchased a three-bedroom apartment off-plan at Juniper Gardens in Berkeley’s Oval Village where flats cost from £745,500.

Buyers are able to choose colours for kitchens, bathrooms, carpets and wardrobes styles, ahead of a cut-off date, at no extra cost. Bigger modifications, such as changes to layout, are possible, but subject to planning and other conditions, and bring associated costs.

Kate Williams and her husband Paul plan to sell their five-bedroom, south London home before moving into their new three-bedroom apartment at Oval Village in 2024 (Handout)
Kate Williams and her husband Paul plan to sell their five-bedroom, south London home before moving into their new three-bedroom apartment at Oval Village in 2024 (Handout)

Part of the appeal of buying off-plan is that it gives Kate and Paul the certainty of a purchase but also time to arrange their lives. “Our new home isn’t due to complete until 2024 which is ideal for us. The process of moving from our home of many years will mean plenty of decluttering, so having time on our side is really helping us manage things calmly.”

The couple are moving from a five-bedroom house in the same area.

The cash buyers

Gerald and Mary Spencer, both 82, moved into a two-bedroom apartment at Central Square in Hanwell in November 2021. “When we saw it in May [2021], it was a building site and we couldn’t imagine that we could live here,” they say. But the couple were persuaded after seeing a show flat that was identical to theirs. “We liked that the decisions were made for us. We had previously renovated a house from top to bottom and it broke us emotionally.”

The Spencers were cash buyers, having already sold their home in Kent, and became one of the first people to move into the development. For them, one of the big advantages of buying from a developer was there was no chain and no chance of being gazumped.

There were very few snags but any there were were fixed immediately, as the team were on-site. “The site manager took us on a tour when we moved in and showed us how everything worked. They came back two days later to check everything was OK and then again after six weeks.”

The family home search

Off-plan purchases are also becoming increasingly popular with families. Jennifer Woods-Blee, 36, bought a four-bedroom house off-plan in Faversham, Kent: “It suited us because our first house was a complete doer-upper and with two little ones in tow (five and three) we didn’t want to do another renovation.”

Jennifer transferred the mortgage from their former property in Bedfordshire and did a port and top-up. “It was super easy. In terms of valuation, the bank could see what other properties on the site had already been sold for,” she says.

Mortgage offer expiry dates

While Jennifer had a smooth mortgage experience, Sarah Tucker, founder of The Mortgage Mum, highlights that off-plan purchasers need to be mindful of the expiry date on their mortgage. “Often buying off plan requires exchange to take place before the build completes,” she says. “Make sure your broker has factored in what to do if the new build hasn’t completed in time, as some mortgage offers can’t be extended and will need to be started from scratch.”

Customising home design

Unlike the Spencers, Jennifer was able to customise her home’s design. “We were able to choose tiles for the bathrooms, flooring, kitchen cupboards and fitted wardrobes. We also chose to upgrade certain finishes, like spotlights in kitchen and bathroom,” she says. “There were some things we wanted to do which we weren’t able to like removing a kitchen cupboard on the plan to make room for an American-style fridge-freezer.”

Jennifer also flags that buying off-plan means you’re “not able to see your house in real life until months down the line when you’ve already committed.” She also thinks it’s best suited to someone who plans to live there long-term “because you’re limited in how much value you’ll be able to add to your home in a short space of time… It’s not a way to make money (although it is possible).”

The advantages of buying off-plan

  1. Certain elements of the build eg décor are customisable

  2. A 10-year warranty comes as standard for most builds

  3. If prices rise, you can potentially make a profit before you’ve moved in (but vice-versa, you could make a loss)

  4. You’re moving into a brand-new house that’s a blank canvas

The disadvantages of buying off-plan

  1. Builds get delayed which have a knock-on effect if you’re selling and/or have a mortgage offer with a deadline

  2. You have to commit to the property before you know what it looks like or have met your neighbours

  3. You may lose some or all of your deposit if you decide to pull out before completion

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