For many reasons off plan property makes an excellent investment, one of the key factors being the opportunity to achieve strong capital appreciation.
Furthermore, early investors are often privy to favourable purchase prices and have access to the choice pickings of the units.
But what happens if the developer goes bust after you’ve paid your deposit?
This is a fair and reasonable concern, investors will be happy to know that developers will likely have a deposit protection scheme in place.
Make sure you’re protected
For the most part, when you’re buying a property off plan any reputable developer will recognise that a deposit must be protected.
It’s good practice for a deposit to be guaranteed by an independent warranty provider such as NHBC, Build-Zone, BLP or LABC – each of which is recognised by the trade association, UK Finance.
In the instance that the developer runs into difficulties these providers will either complete the development or repay your deposit.
Check the developer’s track record
Buying something that’s not yet built can seem daunting which is why it’s important to buy a property that’s being constructed by a developer who has a long track record of meeting agreed timelines and delivering high-quality properties.
We carefully vet each and every development we propose for investment, combing through a developer’s past builds and success rate whilst considering the credentials of their newest proposal.
Benefits of buying off plan
Safe in the knowledge your interests are protected as highlighted above and that in any case you’ve chosen a reputable developer, there are several key benefits of buying off plan property over a second hand one:
- The property could be worth significantly more at the point of completion compared to the purchase price agreed before the property was built
- It might be possible to secure a discount and additional inclusions such as a parking space, especially if you are one of the first investors
- It is often the case that investors can secure an off plan property with a small deposit and there is sometimes the option to purchase via staged payments which can be preferable depending on your financial position.
Is buying off plan a good investment?
Absolutely, off plan property is an excellent investment asset. Time and time again we see pessimistic investors pleasantly surprised by the excellent returns and scalability an off plan purchases offer.
Off plan investment has previously suffered a bad rap and some have been put off after hearing a less than desirable story about an obscure development in an emerging market recommended by a friend of a friend that said it was a sure bet and it ended up not quite going to plan.
Times have changed and investors now have access to a huge pool of information via the world wide web and though these stories still hang about they’re not representative of today’s market – there are greater protections in place and any good solicitor will ensure their client is well protected when entering a contract that has financial obligations.
This said you should research who you’re working with, check out the developers track record and confirm the appropriate protections are in place. We’d expect nothing less of an investor who’s taking his or her financial interest seriously.
Expert guidance when investing
Of course, you can save considerable time and energy by working with an experienced investment consultant. They’ll be able to share information on each proposed location and reasons why you should be considering that area, with facts and figures to support their claims.
Furthermore, having carefully vetted each development and the developer behind it they can confidently propose opportunities that offer the greatest potential.
The team at Thirlmere Deacon are here to propose the best available investment prospects based on a client’s position and plans for the future. To talk to us about your plans to invest in property please do contact us. We’re available on +44 (0) 203 950 7939 UK or +971 (0) 4 818 7277 Dubai or email us on info@thirlmeredeacon.com, and we shall reply as soon as possible.
