Buying new homes off plan
It’s sometimes more cost effective in terms of buying a property within your budget to buy it before it’s been built.
Many property developers and builders often sell all or part of a development before the building work has been completed.
How does it work?
Usually an interested buyer will view the plans and drawings and pay a reservation fee for a unit. This fee is normally up to a maximum of £1000. Once 28 days have passed the buyer will be asked to pay a 10% deposit and, in most circumstances, if the buyer changes his/her mind before the 28 period is up the reservation fee is generally refundable.
Then, depending on the nature and size of the development, the buyer will have to wait for anything from a few months to a year until the development is close to completion before the developer will provide a moving in date. The balance owed on the property is payable on completion.
Buying off plan can provide you with an excellent investment, especially in a rising market as you'll be buying at 'last year's prices', you'll also be able to personalise some of the fixtures and fittings and interior (and in some cases exterior) decoration and it can often making buying in a desired area more affordable, especially for first time buyers.
However, caveat emptor does apply here. As we've seen in 2008 the market can fall as well as rise, so you may well find that you could be out of pocket if you pay at 'yesterday's high prices'. Although in our experience developers do in the main meet their completion schedules, there may well be delays, some foreseen some unforeseen, which could have knock-on effects, especially if you are in a chain.
Part-Exchange
Over the past few years developers have been increasingly offering part-exchange deals. These deals will enable you to sell your current home to the developer in return for a discount on the price of the new property you want to buy.
This is one way of guaranteeing you a buyer and removing the worry and hassle of having to sell your house on the open market - not to mention avoiding estate agency fees (!). However, your home may well fetch a higher price on the open market.
