Buying a property off-plan is an attractive proposition for many people.
According to the latest figures from the National Association of Property Buyers (NAPB), 37% of all new properties sold in England and Wales in 2021 were sold off-plan.
Buying an off-plan home is most popular among those taking their first steps on the property ladder, with first-time buyers making up just over two-thirds (67%) of off-plan purchases, according to real estate agency Hamptons.
Off-plan properties are generally new builds, and buyers usually commit to a purchase before the development has been finished, sometimes even before construction has begun.
Although chain-free, the legal process associated with an off-plan property purchase is not straightforward. Conveyancing on a property bought off-plan is different to buying and selling an established property and often throws up unique challenges that require specialist expertise.
In this article, our experienced Residential Conveyancers answer frequently asked questions about off-plan property purchases.
What is an off-plan property?
An off-plan property is a property that has not yet been built. People who choose to buy a property off-plan commit to the purchase without seeing the finished product, and instead use floor plans, computer-generated images, and possibly a show-home to get an idea of what their new home will look like.
It is always worth checking that the fittings in the home you are buying will match those on display in the show-home, for example, a superior quality carpet may be laid in the show-home and it may be different to the quality of carpet the developer intends to lay in the home that you are buying.
A buyer purchases an off-plan property directly from a homebuilder or developer.
What are the benefits of buying a property off-plan?
Some advantages of buying a property off-plan include:
- It is brand new and there have been no previous occupants.
- A buyer can give their input into the property’s specification, including the layout of the property and the choice of fixtures and fittings.
- Developers often offer incentives for off-plan properties, and buyers can negotiate discounts on price.
- Buying a property off-plan means it could increase in value between your reserving it and moving in.
- Off-plan properties are bought directly from a homebuilder or developer, meaning there is no forward conveyancing chain.
- Any adaptations that may be needed, for example, to cater for the needs of an elderly or disabled person, can be factored into the build.
- Off-plan properties usually come with a new-build warranty to protect the buyer from any costs arising out of any structural defects caused by poor design or construction.
What are the disadvantages of buying a property off-plan?
The downsides to buying a property off-plan can include:
- Buyers can’t see the property before committing to a purchase.
- Any issues encountered during the construction process could cause delays.
- The property’s value could go down between a buyer agreeing to purchase it and moving in.
- There is a risk that the developer in charge of the project could go into liquidation before completing the build.
- Some lenders don’t offer mortgages on off-plan properties.
- Any delay in the build could result in a mortgage offer expiring and the buyer would have to re-apply for a mortgage. If this were rejected, and the buyer could not proceed with their purchase, they would lose their deposit and could even face legal action.
There are several additional risks involved in buying a property off-plan.
Appointing a conveyancing solicitor with experience in the purchase of off-plan properties can help ensure the process runs smoothly and any potential issues are anticipated and addressed.
At Beverley Morris & Co., our dedicated residential property solicitors can advise on all the legal issues encountered when buying a property off-plan, and they will provide clear, practical and pragmatic advice should any problems arise.
Our conveyancing specialists are accredited under the Law Society’s Conveyancing Quality Scheme so you can rest assured you have direct access to expert help.
We always provide a service that you can rely on and that we are proud of. To speak to our Residential Conveyancing team today, call 020 8852 4433 or email enquiries@beverleymorris.co.uk.
How does the conveyancing process differ on an off-plan property?
Conveyancing on an off-plan property often presents different challenges to buying a property that is already built.
Some key differences between conveyancing on an off-plan property compared to one that has already been built include:
- Exchange of contracts. For an off-plan purchase, a buyer usually pays a reservation fee to secure the property and contracts are exchanged much earlier in the process. Some developers require contracts to be exchanged within 28 days of the paperwork being received by the buyer’s solicitors. If this isn’t achieved, the buyer may face losing their reservation fee and the sale falling through.
- Completion date. The exchange of contracts can happen many months, or even years, before the property is finished, meaning that the completion date is often vague and will not be known until the property is finished . Usually, a buyer receives two weeks’ notice of the completion date after the property has been finished and is ready for occupation.
- Mortgage arrangements. It can be more difficult to secure a mortgage on an off-plan property as some lenders are cautious about agreeing to lend on a property that has not yet been built. Most mortgage offers last three to six months. If an offer expires before the purchase has been completed, the buyer may need to reapply for a mortgage.
- Additional checks. In addition to the usual standard property searches (local authority, water and drainage, environmental), a conveyancing solicitor will want to review the developer’s acquisition of the land, any site decontamination work, that the necessary planning permissions and building regulation approvals were obtained, that the property has a new build warranty and that any appliances are sold with the necessary guarantees.
- Surveys. A full structural survey is not always possible on a property bought off-plan. However, it is advisable for a buyer to undertake a snagging survey before completion to identify any defects and highlight any potential issues to the developer.
Residential Conveyancer Near Me
Buying a new home is an exciting time, but for a property sale or purchase to go smoothly, it is crucial that you enlist the help of an experienced residential property solicitor.
At Beverley Morris & Co., our dedicated team of conveyancing solicitors is very experienced in helping a wide range of people complete their dream move.
Whether you are buying a property off-plan, moving house or are an experienced property developer, we will provide a personalised service designed to fit your needs, supporting you every step of the way.
To speak to our Residential Conveyancing team today, call 020 8852 4433 or email enquiries@beverleymorris.co.uk.