So, what is an off-plan property investment, and why is it particularly important in the UK?
Off-plan property investment is where an investor purchases a new-build property before construction has started.
Once the property is completed, an investor can rent out the property, hold it, or sell it for solid capital gain.
In essence, the investor is purchasing what a property will be rather than what it currently is. And with the property not yet completed, it can mean that the investor benefits by providing a lower than the typical deposit for a similar property, and the asking price is lower than its value when construction is completed.
There are, admittedly, some risks associated with off-plan property investment, such as project delays. Still, the financial benefits of investing in one or more properties have increased its popularity.
Why Has Off-Plan Become so Lucrative?
You can sell your property on completion. As we mentioned before, you can sell the property as soon as it’s ready to move in to.
For example, suppose you buy an off-plan property valued at £170,000. When the property is completed, it could be worth £220,000 at its most competitive price, meaning a £50,000 capital growth in the deal.
Of course, you don’t need to sell immediately; as we mentioned, strategic investments around the HS2 developments could give you incredible returns, particularly if you’re looking to rent it out.
But it’s great to have the option of a quick property flip! Property flipping is an excellent strategy for investors looking to make substantial capital gains once the project is complete.
There’s also the fact that you can choose the property’s location. As an investor, there’ll be hundreds of properties that you’d love to add to your portfolio.
Still, inevitably, those aren’t the ones for sale. However, when you’re buying an off-plan property, if it’s an apartment facing the river that you want, you can secure it. You don’t have to settle for your second choice.
We’ve already mentioned some of the appeals of off-plan investments for those looking to rent out a property, but we haven’t mentioned that new properties are typically more energy-efficient than older homes – another massive draw for tenants.
Finally, another big plus is having control over your property. Sure, you can’t control when the project is finished, but what you can influence is how it looks when it’s complete. If you’re looking to rent out accommodation (or even live in it), having the power to choose flooring, lights, colour, and so on is a massive plus that would be more expensive in an existing property.
You can choose how involved you are in the process, and the company that manages the furnishing of the property can buy in bulk – and get incentivised costs for doing so – meaning that any changes you want to make won’t hit you in the pocket.
Pros and Cons of Off-Plan Property Investment
All investments come with risk, but we only offer our clients the best developments in thriving locations across the UK’s performing cities here at AF Property Investments.
The advantages and disadvantages of buying off-plan depend primarily on the location and the type of development – but here are some of the common pros and cons of off-plan investment.
Advantages of Off-Plan Property Investment
Disadvantages of Off-Plan Property Investment
Step-by-Step Guide to Buying Off-Plan Properties
- Find a suitable development that works with your budget and goals, and talk to a mortgage broker about your circumstances.
- Reserve a home/apartment and pay the reservation fee to secure your desired property.
- Choose a conveyancer to deal with the legal aspects of the property purchase.
- Arrange your mortgage for the property. The lender will then arrange a valuation based on the plans, development specification and location.
- Complete all the paperwork, exchange contracts and pay your initial deposit on the property.
- In the weeks before the final completion, you should have a survey conducted to check for any defects in your property.
- Get ready for completion. The developer will usually tell you two dates - the short stop, the date the developer expects to complete and the long stop, the date the developer has to complete.
Want to invest in off-plan property without the hassle of sorting it out yourself? Get in touch to discover how our services make investing in off-plan developments seamless.
Our services cover the whole investment process from start to finish. Our available off-plan developments include luxury apartments and high-spec residential developments in the best locations throughout the UK to ensure the highest return on your investments.
Where to Invest in Off-Plan Properties
Not all areas and cities in the UK offer the same returns on your investment. Here are some of the best locations across the UK for buying off-plan units.
Off-Plan Properties in Manchester
Manchester is one of the UK’s most profitable investment cities. As the main city at the heart of the Northern Powerhouse, Manchester will see some of the highest capital growth in the UK, with a projected 25% increase by 2025. Now is the perfect time to purchase property in Manchester.
For any property investors, buy to let properties in Manchester have seen prices and yields accelerating significantly faster than the UK average. Off-plan property investment in Manchester offers buyers the potential for making a substantial return on investment and a steady rental income.
House prices in Manchester continue to rise throughout 2022, with some of the highest increases in the country. House prices in Manchester have increased by nearly 20% over the last 12 months, and with no signs of slowing down, Manchester is an ideal city for off-plan property investment.
Manchester’s rental market is thriving for investors looking at renting out off-plan investments. Rental demands across the city are expected to increase by 17% by 2025.
Current Availability:
Three60 – invest from £218,995
Michigan Avenue – invest from £175,995
Off-Plan Properties in Liverpool
Liverpool is quickly becoming recognised as one of the best property investment cities in the UK due to the lower prices compared to London, Birmingham and Manchester. Affordable house prices and solid rental demands offer investors excellent opportunities for high yielding investments.
Liverpool house prices are expected to increase by more than 28% over the next few years. With investment opportunities at St. Anne’s Gardens starting from only £91,000 per apartment unit, Liverpool’s off-plan investments are very encouraging over the next few years.
Current Availability:
St. Anne’s Gardens – invest from £218,995
Off-Plan Properties in Birmingham
Birmingham has long been known as the UK’s second city. With the biggest international companies moving to the city and investment catalysts such as HS2, Birmingham is poised to become a property investment hotspot.
Birmingham’s promise of opportunity and continued development has also drawn over 3,000 tech firms, making Birmingham the largest’ start-up’ centre outside London.
A robust rental market fuelled by a young population, business growth in the city and high demand for rental properties across the city makes for one of the most desirable cities for investing in property, not just in the UK but across the globe.
Capital growth predictions show that property prices in Birmingham will see a 24% growth by 2025, and with rental demands expected to increase by 28% over the next few years, our off-plan investments are ideal for anyone looking to invest in UK property.
Current Availability:
Southside Residencies – invest from £218,995
Parkview Apartments – invest from £249,950
Final Thoughts
Should you invest in an off-plan property?
In short – yes.
The potential for growth is highly lucrative, it’s a less competitive market than existing homes, and if you’re someone who sees opportunities in something that others don’t, then off-plan could be an excellent way for you to invest.
Ready to learn more about our available developments in the UK? Check out our off-plan investments in Manchester, Liverpool and Birmingham.
