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Firstly, What Is Off-Plan Property?
Off-plan property is a property not yet built, also known as ‘new builds’. From 1-bedroom apartments to four-bedroom detached new homes, investors can purchase such properties before construction has even begun.
Due to there not being a physical property to view, investors looking to buy an off-plan property can base their decision on specific floor plans, CGIs, and show homes. These help them to better envision their potential investment. Off-plan properties for sale experience lower costs, in buying and maintenance, alongside high rental income to match the demand.
In short, yes – absolutely. Off-plan property is one of the best types of property investment. The new-build market is constantly growing to feed the housing shortage and so receives high demand.
There are pros and cons to every investment, but such concerns waver when you are fully prepared and have a consultant at your side. And, when it comes to off-plan investments, there are far more positives than negatives.
So, what are the benefits of off-plan property?
More Value for Money
Off-plan properties can often be purchased 10-15% below their market value. As the development reaches nearer to completion, this can drop to 5-10%. Even this percentage represents fantastic, profitable growth. If timed correctly, however, buyers can maximise their return on investment.
In the current climate, with house prices looking to drop, buying off-plan can be the best way to invest your money. While waiting for the development to complete, the property market fluctuates and, especially if being built in a hotspot location, its value will increase over time. This means that investors can immediately profit from instant equity once the development is built.
Meets Demand and Tenant Requirements
High-demand areas see the most off-plan properties for sale. New-build developments are specifically built in these areas for their high demand and great capital growth potential.
Off-plan property investments are more modern and built to a higher specification, which is desirable to young professionals. However, the biggest benefit and now a requirement from tenants is a new-build’s energy efficiency. Being more up-to-date, off-plan developments are more insulated and are fitted with newer heating systems and the latest appliances. Due to this, new builds offer higher EPC ratings and lower utility bills, which individuals are of course drawn to. Buyers are even willing to pay up to 20% more for an energy-efficient property. According to recent research, too, 80% of new homes have an A or B energy-efficiency rating, which encourages the attractiveness of new homes and requirements tenants look for.
What is more, newly built properties have the most up-to-date infrastructure, meaning less work and lower costs for later additions like electric car chargers and solar panels to increase their energy efficiency.
Some of the Highest Returns Achievable
Buying off-plan can hold some of the highest-yielding properties seen in the market. The value of the property increasing over time has already been covered, but seeing how profitable your investment is before it is even complete and ready to be tenanted is not something to forget. Especially in investment hotspots, where house prices are on the rise, investors can watch their incoming capital appreciation as their property is built.
Rental income for an off-plan property is high to match the equally high demand and quality of the build. Due to the high specification of off-plan property, from its heating to the latest appliances, rental prices are higher than the average property. Tenants are willing to pay these higher rents, however, as utility bills remain low and the property looks the part. Seeing as tenants are also unable to redecorate or replace white goods in the average rental property, a new build offers far more appealing and modern décor than other developments.
Complete Peace of Mind
While buyers may be anxious to invest in a property that does not yet exist, benefits greatly outweigh concerns. Once the purchase is finalised, investors just need to sit back and wait for their off-plan property to be completed, increasing in value over time. Even when it is ready for tenants, investors can still be hands-off with letting and managing the property, all while greatly benefiting from passive income.
Off-plan properties are completed to a higher standard, with newly-fitted appliances and up-to-date wiring, meaning far less maintenance is needed. If an issue does arise, new-build properties are often covered by a 10-year warranty to help this. Two more benefits of off-plan property investments.
With the new EPC criteria, some landlords are expected to £27,000 pay to ensure their properties meet the new standard. With a new-build property, investors need not worry or spend a penny to upgrade it. Off-plan properties already meet the EPC criteria.
Intrigued by Off-Plan Property?
Everything you need to know about investing in off-plan property is in our Investorpedia. That way, you can be 100% confident in your purchase.
Click here to download Your Guide to Investing Off-Plan.
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