The UK residential property market is worth £7.29 trillion with average house prices doubling every 10-15 years. With the consistent undersupply of property on the market, now is the perfect time to invest to see excellent capital growth and high rental returns.
Buying off plan property means you’re making a purchase at the early stages of development. When you make an investment at this point, you’re securing the unit at today’s price. This means there is plenty of room for your investment to grow in value, giving you the opportunity to make healthy returns at a significantly lower initial cost.
There are many benefits of buying off plan property, as it’s one of the best types of property to invest in. We have highlighted the main reasons to consider this asset class below.
Buying Off Plan Can Lead to Better Value and Reduced Costs
One of the key benefits of buying off plan property is the comparatively low purchase price. In major metropolitan areas such as Manchester, it’s not uncommon to see traditional properties on the market with purchase prices sitting at the £130,000 – £160,000 level. In comparison, you could invest in a luxurious new build property still under construction in Manchester city centre for as little as £157,000.
Off plan properties that are tailored to the target markets are more likely to grow in value, representing a much healthier return on your investment. By the time the development is ready to move into, the capital uplift for your property could be significantly higher than your original purchase price.
In some cases, off plan property developers may also be willing to offer investors an “early bird” discount, saving you even more money, and creating a stronger opportunity for a more successful investment. And by purchasing directly through a developer, you can avoid other costs such as estate agency fees.
Another advantage to making an off plan property investment in the UK is the developer’s payment plans. This allows you to spread your payments over the duration of the build, giving you plenty of time to arrange your finances.
Normally, you would expect to see an initial reservation fee, which will form part of the purchase price and a % deposit paid on the exchange of contracts. It’s also worth noting that some lenders might only offer you a mortgage six months prior to completion, so we would recommend speaking to your mortgage advisor as soon as possible to ensure everything is in order.
The Property Will be Brand New
A major selling point for new build properties is that new developments tend to be more efficient in relation to bills and services on offer. With climate change being a key topic of discussion in the UK, new builds are often constructed to be as carbon neutral as possible, making the property more desirable and cost-effective in the long-term.
Off plan properties can generate intrigue within the area, which will help you when the time comes to rent the unit out, as locals are always keen to see how the project develops over time. Showflats and property staging services can then be used to generate more interest and excitement, which can lead to viewers becoming tenants.
When looking for a suitable investment property, you want to be confident that you’re not purchasing a unit or building that has underlying maintenance issues. Before the new residents move into the building, safety checks and snagging duties are carried out by the development team. This means you can be confident that your property won’t need any renovations or updates in the short term in order to keep your tenant safe and happy.
New properties can also be purchased with a New Build Warranty, which protects investors for up to 10 years against any construction defects.
Another excellent advantage to purchasing off plan property investment in the UK is the chance to pick your own unit. During construction, you get to see how the development is coming along, and if a particular unit interests you more than the others, the developers may be willing to let you purchase that one.
You will also have more of a voice when it comes to the decor. As the property still needs to be built, you can make suggestions in regards to fixtures and fittings that you like. When you purchase an existing property, you’re usually left with the fittings that are already in place unless you want to pay to have them changed.
Key Factors to Keep in Mind
While there are many benefits to buying off plan property, it will suit a certain type of investor more than it will others. As such, it’s important to remember that:
- Off plan property investments in the UK require patience: You can’t rent out your unit until the property is fit for habitation, so it may be some time before you start to see a return on your investment.
- Delays are a possibility: Property developers always have a plan in place and a time-scale to work towards, but delays can happen during the construction of a property. Problems can arise that may temporarily put the project on hold.
- The property market can change: Many property experts have a good idea of how the market will look within the next few years, but new variables that weren’t taken into account can change things. A good example of this is how the Coronavirus pandemic changed the global property market at the start of 2020.
The Benefits of Making Off Plan Property Investment in the UK Through Treo Investments
The off plan property market can be highly lucrative for investors. By purchasing the right unit, you could see excellent capital growth and high rental yields over the next few years.
However, in order to see these returns, the location of your property and the track record of the developer must be taken into consideration. At Treo Investments, we only present our clients with opportunities that we have full confidence in. This means sourcing deals in desirable locations that are being led by reputable developers with an excellent track record.
Our service provides you with a complete hands off experience. We will find the opportunities, complete the due diligence process and ensure your property is ready for the open market.
If you would like to learn more about the off plan property deals we can present you with, please don’t hesitate to contact a member of our team today.