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Off plan propertyProperty Information & Advice > Offplan property |
Buying Off-Plan
What does buying a property off-plan mean?When you buy a property off-plan, you purchase a house or apartment before the building has actually been completed. In some cases, buyers purchase a property long before completion date. This is known as the 'build programme' of a house.
So an off-plan property is not actually finished?Off-plan properties are referred to as 'plots' and are often only given an address once the build has been completed. Architectural plans, which buyers use to base their purchases on, are usually numbered. Off-plan properties do not even need to be nearing completion to be sold.
Why do people buy property off-plan?There are a number of reasons why people purchase property off-plan. Some buy off-plan property as an investment, using discount prices to turn a profit. Often, purchasers will buy several plots, such as the whole floor of an apartment building. Investors take advantage of prospective increases in house prices afforded by build times. Once a build is complete, the property is re-valued, and in theory the investor makes a profit due to capital appreciation and rising house prices. There are other advantages to buying off-plan, including assignable contracts. This entails selling an off-plan property after the exchange of contract but before legal completion. Not all developers allow this, but it can be a lucrative avenue for the buyer without the need to complete a purchase, apply for a mortgage, or pay stamp duty. This is known as 'flipping' in the property development world. Similar to assignable contracts, back to back sales are another aspect of off-plan property purchase. However, in this case the original purchaser has to make sure the second purchaser completes on the property as a legal requirement. If the end purchaser fails to buy the property, the first purchaser must, or risk being in breach of contract.
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