You absolutely can buy a new-build property before it’s built – in fact it’s not that uncommon for people to do so. The common term used for this is buying off-plan, which means you buy the property based on the plans, rather than on a physically completed structure that you can view in person.
The question is, should you buy a property that has not yet been built? And the answer to that question depends on several factors:
- Your circumstances (including your finances).
- The property developer’s track record.
- The current property market locally and nationally.
But before we look at the potential pitfalls, what are the benefits of buying off-plan that lead many people each year to put in an offer on a new-build that has not been completed yet?
Benefits of buying a new-build before it’s built
There are actually lots of reasons why you might want to buy off-plan. For example, you could be the first buyers on a new housing development, giving you first pick of which plot you want. In fact, you might even get a discount as an incentive to buy the first property on a new development.
Although the property sector is a little uncertain at the moment, In a market where house prices are rising, buying off-plan allows you to ‘lock in’ the value of your new home, which can mean that by the time you move in, it is already worth more than you paid for it.
And you might also get a say on the finishing touches, whether that’s the colour of your kitchen tiles or laminate floors, an upgrade to metallic light switches instead of plastic ones, or some other influence over the fixtures and fittings. This can also have a significant impact on the cost of moving as redecoration and renovation on an older property could make quite a dent in the money you have set aside for the move.
In Leicestershire there are many attractive new housing developments currently being built across the county, so buyers should be in a strong position and have plenty of options to choose from.
Risks of buying a new-build off-plan
Now for some of the downsides, and they are considerable. Buying off-plan means if the development is delayed, your moving-in date will most likely get pushed back too so if you have a date fixed in stone, this could cause problems. Having said that, until the exchange of contracts, any sale can fall through with very little notice.
You will probably find your access to mortgages is severely restricted if the property you want to buy is not built yet – and if your mortgage falls through and you have to back out, the developer could take legal action.
In some of the worst cases, a sudden slump in the housing market can mean you are left in negative equity without even having a house to move into, and no moving-in date if the development is postponed indefinitely.
Problems with buying off-plan?
If you decide to buy a new-build property before it is completed, it’s important to get the legal work right to make sure you are protected against the risks as much as possible, and to get ownership of the property into your name as soon as it is ready.
Bray & Bray Solicitors’ residential conveyancing team are experienced in handling the conveyancing of properties bought off-plan and in conventional property purchases too.
To find out more about how we can help you with any problems with buying off-plan or to appoint us to handle the conveyancing of new-build properties, call your nearest Bray & Bray office:
Hinckley: 01455 639 900
Leicester: 0116 254 8871
Market Harborough: 01858 467 181