by Mark Johnston
Buying a Property Off Plan!
During the property boom years, buying a property off plan was a popular concept, but when the market plummeted, so did the demand for off plan.
Government schemes have given house builders a boost in recent times and things it seems is finally starting to pick up.
Therefore, it now appears that due to the help to buy scheme thousands of people looking for a new home are now once again buying off plan, a trend last seen at the height of the property boom before 2007.
Estate agency Savills has recently reported that 80 per cent of its new build sales are now ‘off plan’.
The fact is buying a home before it has even been built requires faith.
Robert Fraser, of London estate agency Fraser & Co, says: “Some people had their fingers burnt buying off plan during the downturn.”
When buying off plan potential buyers agree the price with the property developer then they typically pay a 10 per cent deposit, with the rest of the amount paid on completion. After this they then have to wait up to a year until the home is finished.
Although at the moment developers participating the new government Help to Buy scheme will allow buyers to reserve a new home with a 5 per cent deposit.
The problem with this is that if prices are rising, the chances are the home will have already proved a good investment by the time the buyer moves in. However, if prices go down, then the buyer will have lost money before they even get through the front door.
Though in a strong market, as we have seen recently, profits of between 10 per cent and 20 per cent can be made from an initial 10 per cent deposit.
However, Guy Jenkinson, at consultancy Bidwells, says: “You are in a strong position to negotiate with the developer, who may offer discounts to achieve sales that help off set the costs. You can also choose fixtures and fittings, and even redesign some of the rooms.”
But while a property may look good on paper, the new home may not live up to expectations.
The show house is the most useful tool in gauging the reality of the potential property. If the show house is exactly the same as the prospective purchase things are a lot easier. However, if the property is different from the show house potential buyers should not be scared to spend time working through the differences, with a tape-measure if necessary, until they happy they can visualise their own property.
Many property experts suggest that once a buyer has signed the contract they should not sit back and hope for the best. They should therefore make regular trips to the site and should not be shy about asking questions.
All in all buying a home off plan requires confidence in the developer, scheme, location and local market.
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