How do I go about buying a flat off plan?
By Jo Eccles
Q. I’m considering buying a property off plan. Is there anything I should be aware of?
A: Buying off plan is really popular, especially as there are so many developments being built in London. You do need to know what you’re doing though; when choosing which development to buy in, do your research on the location and also the developer itself. Check whether the developer has a good track record for producing high quality work, there are some developers who are superb and others who I would never recommend clients buy from, so do your research.
If you’re buying as an investment, don’t be fooled by slick marketing materials or rental estimates. In my experience, the estimated rental yields provided by developers or marketing agents are always extremely optimistic so use their figures as a guide, but I always take off 20 – 30% to be prudent when doing sums.
Once you know which development you want to buy in, choose your ‘unit’ carefully; study the layout of the development and make sure you have a good understanding of the outlook of the properties you’re considering. Also remember that developers often release units for sale in stages, so even if you’re not offered a property on a particular floor because it hasn’t been released yet, there’s always an opportunity to negotiate. We secure unreleased units for clients all the time; it’s just a matter of knowing that it can be done, and having a good enough relationship with the developer to do it.
When you’ve chosen which flat you want to buy, pay attention to what is included as standard; often the show apartment will include a higher specification kitchen, wardrobes in each room, wood flooring and so on – the standard purchase price may not include half of these things, so don’t assume anything. When you do make an offer, ensure that you write a very thorough offer letter to accompany your reservation fee. Some developers have extremely detailed reservation forms which outline the finishes you’ve chosen in each room, whether wardrobes or curtains will be included and so on, but others can be much more basic.
When it comes to paying for the property, you usually pay 10% of the purchase price on exchange and then additional amounts in stages as the property gets closer to completion. Do be careful though; whilst it can be years between the first and final payments, personal circumstances do change. Therefore, make sure at the outset you are confident of having the funds available to complete the purchase in line with the estimated completion date. It depends on the terms of the contract, but a purchaser can be informed to complete at very short notice, sometimes in as little as two weeks!
If you have a question you’d like Jo to answer please email email@example.com or tweet her @joeccles.