Property advice – Buying off-plan
PUBLISHED: 12:17 22 April 2014 | UPDATED: 12:17 22 April 2014
Buying a new home off-plan in a rising market offers a range of advantages over purchasing an older property, says Roger Pollard, head of Savills’ Northwood office
Latest research by Savills indicates that house values in the Home Counties will rise by between 23 per cent and 25 per cent by the end of 2018 for prime property and by as much as 31.9 per cent for main stream property over the same period. Much of this is attributed to the increasing number of individuals looking to capitalise on the value of their London homes as they seek more house and land for their money away from the capital.
Additionally, Savills research has asserted that the Help to Buy Scheme introduced by the Government last year, has been pivotal in contributing towards boosting sales of new homes markets outside London and throughout the south east, supporting 12,875 sales since its inception in April last year.
Given the positive prognosis of the residential market, for many considering purchasing a new home, there are certain advantages to buying into a development off-plan.
One of the concerns purchasers often have with buying into a new development is the inability to put their own mark on the property. One of the main benefits of purchasing a new home off-plan (such as at the Savills Northwood-marketed Royal Keys in Berkhamsted, pictured, where nearly 50 per cent of the development has been sold or reserved off-plan since October) is choosing fixtures and fittings to suit personal taste, ensuring a purchaser will like every aspect of their new bathroom or kitchen. Irrespective of whether a purchaser buys a new home or a period house, it is rare they will like absolutely every aspect of their new home and, even rarer that they will have the budget to immediately rectify aspects they do not like. So having the ability to choose fixtures and fittings presents an attractive opportunity.
The other obvious benefit of purchasing off-plan in a rising market is that you pay the price for the property as it is valued at the point of sale – not the point of completion. Therefore, in a rising market, the value is likely to have already increased by the time the property has been completed and it is time for the purchaser to move in.
However, buyers do need to fully appreciate the binding nature of the contract they are signing. The advantages of buying off-plan in a rising market are counteracted by the disadvantages should the market be losing value. While it seems unlikely the market value will fall in the immediate future, it is something purchasers should bear in mind. As a result, the importance of purchasing through a reputable agent and a reputable developer cannot be underestimated. We would always advise purchasers to use a solicitor who specialises in off-plan contracts and will be in the strongest position to flag up any potential pitfalls.