Should I buy an off-plan property?

A very hearty welcome to our first blog!

In all honesty, this should've been posted last summer when we were working with lots of clients who purchased off-plan. As cliche as it sounds, we got busy and well... you can guess the rest.

You might think I'm jumping straight into the deep end by writing about this topic instead of a detailed welcome post but I know how people work. As humans, we want guidance and straight facts especially when you're contemplating whether or not to buy that off-plan property that you've had your eye on.

I like to think I'm a people's person, so let's get straight in to it!

What is an off-plan property?

A good starting point would be to know what an off plan property is.

An off-plan property is when a potential buyer or investor purchases a property which has not been completed yet and is still in the process of being built.

What makes it attractive is that they're usually sold at discounted prices as these properties will typically be sold prior to or during the construction phase.

Interested buyers and investors will often decide on whether they want to purchase the any off-plan property based on the 3D renders, floor plans and drawings of what the home should look like upon completion.

These are often provided by the property developers building the new properties.

The purpose of this article is provide you with the pros and cons of buying off-plan. Purchasing a property is undoubtedly a big step as well as a huge milestone for many people looking to get on to the property ladder, so it's important to consider all points before making your final decision.

After speaking to a number of clients who have bought off-plan properties, I was able create a list of advantages and disadvantages based on their experiences which may help you to make a well informed decision!

Advantages of buying off-plan

• New-build warranty

Off-plan properties come with new build warranties. These warranties last for 10 years and are there to protect buyers from structural defects of the new build homes. Within the first 2 years of moving in, the warranty will ensure that the developers will be responsible to fix any defects found within the home.

From year 3 to 10, the developers will be responsible to fix only major structural damages. It is expected that during these years of the warranty, any non-structural damages should be managed by the buyer.

As the home is a new build, this warranty was a plus point for most of our clients that decided to buy off-plan.

• Negotiate for a lower purchase price

With the increasing house prices, off-plan properties are often bought at a discounted rate.

As a buyer, you are able to negotiate the price of these new build prior to purchase. Often times, the buyer will be able to get a good deal for a new build home.

Another attractive point is that once the purchase price has been agreed, it is fixed from the moment the contracts are signed. Regardless of whether the housing market prices increase after the contracts have been signed, buyers will not need to worry about the price changing.

• Attracts first time buyers

Due to the flexibility in prices, buying off-plan attracts many first time buyers.

We all know it's not easy to save for a deposit for a home, however, most developers are open to negotiating on prices and also the deposit amount is less compared to properties that aren't off-plan.

I had quite a few clients that were previously paying rent on properties they were living in. They managed to save during that period and took the leap with off-plan properties once they had saved enough.

Not a bad move - No pun intended!

• A blank canvas

We all know moving in to a new property is hectic.

But imagine, after all the planning and hard work, you finally have a place you can call home.

When you look around most new builds, you'll notice that they all have one thing in common - They're modern yet very simple in design.

Most off-plan properties are designed to be modern yet simple enough so that future owners can make their mark on their new home based on their interior choices. This provided our clients the perfect opportunity to call us in to help add some character to the property.

I always say that the design of your home should show some (if not, all) of your personality. It's YOUR home so let's design it that way!

• Capital growth, increase in value

Another advantage is the capital growth of the property over time.

As many folks know by now, real estate is always going to be a valuable asset to have because the prices increase. With the current situation we're in, post COVID, property prices are still on the rise despite predictions that the housing market will collapse.

Our clients were pleased that they were able to buy their homes at an affordable price, knowing that the value of their home will increase as the years go on.

From the list above, buying off-plan can provide fantastic opportunities for many buyers and investors. It has helped many of my clients fulfil their dreams of buying their first ever home. We continue to receive enquiries from new clients that have just bought their off-plan property and need our assistance when it comes to interior design.

Those were the most common advantages that we received. Let's explore the disadvantages that our clients shared with us.

Disadvantages of buying off-plan

• Uncertainty on how the property will look upon completion

As mentioned earlier on in the article, off-plan properties are bought unlike the conventional way of buying a house in that, there are no viewings of the home in question prior to purchase.

Buyers are provided with floor plans, 3D renderings and approximate measurement of the property while it's in the construction phase. This means that there is a risk that the the completed property may differ slightly to the visuals presented during the purchasing process.

We had a few clients disappointed with the dimensions of their new build apartment when they finally got the keys to their home. Some apartments were smaller than what the floor plans had stated, however, a point to be noted is that the measurements were just approximate so there were bound to be some differences.

Clients were also taken aback by the interior and the lack of functionality within the new build. This was something that my team were surprised with because we had clients telling us how much they've been looking forward to moving in to their new home, but were upset when it seemed obvious that the developers didn't put much thought in to the functionality of the place.

The property itself was awkwardly different to the 3D renderings that were shown in the beginning. If property catfish were a thing, this would've been it. Not to mention, the structural errors that were way too obvious for a new build apartment.

I remember going to one client's house and we noticed that the walls were uneven in the living room which made it difficult to put curtains up. The ensuite to the master bedroom was unbelievably small that the door kept grazing the edge of the basin because it was sticking out like a sore thumb. There were no storage facilities at all in the ensuite or the main bathroom which meant that we had to help plan out spaces for our clients elsewhere around their house.

We know that the new build home warranty covers issues like this, but would you really expect to come across these problems as soon as you move in? No, me neither. So you can imagine how disappointed a lot of our clients were.

It almost felt as though the developers really compromised on building decent, quality homes and focused more on the money they can make.

• Delay in timescales

This could be due to delay in receiving supplier materials and logistics which will impact your move in date.

Delays happen. Especially in big projects where developers rely on suppliers and materials that come from all over the world. However, just how long of a delay is acceptable?

Some of our clients had to find temporary accommodation until the build was completed which had an impact on their mortgage offer which almost needed to be renewed due to the delay on the move in date.

• Losing deposit money

New build apartments may take time to complete especially if it's a brand new block of flats.

As a buyer, you would typically pay a reservation fee to secure the purchase before you can proceed. This will feed in to your deposit for the off-plan property.

One thing to bear in mind is that there will always be a risk that the developer may go bust which may put your deposit at risk if it's not protected. Before signing documents, please ensure you read the fine print and take your time to review the information being presented to you.

Another thing to consider is that if you, as the buyer, decide to pull out for from the purchase, you risk losing some or all of your deposit money.

• Restrictions to interior decor

With new builds, there are usually restrictions as to what you can and can't do in terms of decor for your new home. This was something that I never anticipated prior to working with one of clients last year.

There were restrictions on what you can do to the walls and removing certain storage facilities within their home that served no purpose to our clients from a functional point of view. However, for different developers, there were different limitations on internal decor so it's worth reviewing documents before moving in to your new home.

Conclusion

In summary, it is important to do your research and make sure you are going with a quality developer - new build homes are not all the same, so look up previous projects built by the developer. Just because a developer is well known, it does not guarantee the quality of the new build homes and some of our clients learned this the hard way!

My suggestion would be to visit completed sites that were previously built by a developer of your choice and get a feel of the place. Check out the quality of the home, speak to residents that have already moved in and ask them how it's going so far. They will be able to provide you with some information which may help you make a decision. Read reviews online of developers to find out which ones care about quality and have good ratings when it comes to completion dates.

There is so much information at the tip of your finger tips, just like the blog you're reading right now. Don't feel pressurised to buy an off-plan property without doing all your research first!

I hope this article has helped you to understand whether or not buying off-plan is your thing or if you should stick to buying homes that are already built.

We have a selection of interesting topics to write about in the upcoming weeks so keep your eyes peeled.

Until then, take care.

Salam Alaikum.

TALIM Interiors