Buying a new property off plan is on the rise, especially in Manchester where the market is booming and demand for flats around fashionable City centre locations and Salford Quays is going through the roof!
Buying off plan has a number of advantages and of course one or two things to think about which we will explore in this piece.
Buying off plan means you are committing to buying a property, often before construction has even started and the final completion might be 2 or 3 years ahead. It is quite common of these units to form part of large developments, which are dominating the city’s skyline – along with cranes!
The attraction for many buying off plan is the ability to secure a brand new unit for a modest outlay, followed by staged payments and as often has been the case recently anyway, property values rise during the duration of the build, then the buyer really benefits!
Attractions for buying off plan
You are buying a brand new unit, its been unused and you can often have input with the developer on the finish and colour schemes.
Developers often expect buyers to acquire furniture packs as part of the deal, but that makes the whole process easier, especially for overseas buyers.
The buying process should in theory be simpler. No chain, often the developer will have their own solicitors who have already done part of the legal work.
Another attraction is you know in advance which units are coming up for sale and you can often secure the unit you want in the exact location, unlike the second-hand market where you are waiting for a seller to decide to list their property by chance.
As with all new build you get the added peace of mind of having a new build warranty which could be a 10 year insurance policy against construction defects.
Contrast this with an older building where there may be any number of hidden problems, you would expect to have very low maintenance costs for a number of years.
Speculative investors can see a return on their money and sell the property on before it has completed for a profit, especially in the current market.
Developers are often selling the units with guaranteed high yield rental income figures for a year or two so no worrying about having to find tenants.
Things to consider before buying off plan
New build properties, a bit like new cars with all their added extras can sometimes be a little more expensive than second hand properties. Having said that, there are some fantastic deals out there and with the current property boom in Manchester and Salford, the chances are prices will rise further.
A lot of apartments for instance offer fairly limited space and certainly no room to extend!
Mortgages can be harder to obtain, especially in large developments with lots of units, some lender worry about over exposure. Cash is always king when it comes to buying off plan.
Sometimes completions can be delayed and if you are buying with a mortgage, this can mean buyers having to re approach their lender for an extension or a revised product.
Lease lengths can be a problem and high service charges. It would be advisable to have a solicitor look over the legal pack before committing to the purchase.
Buying the first units in a new development, doesn’t mean the end of the building as often construction is in phases, so be prepared for ongoing build noise and disruption.
Protection of deposit should the builder go bust. The home builders federation says there is a deposit protection code which requires builders to tell buyers how their deposit is to be protected.
Personally, since I have got involved with selling off plan units and working with the best agents in the business, I have been really impressed with the quality, vision of design and low entry point pricing for a lot of the developments around Manchester and Salford. As a local man who has grown up and lived all my life in the area, seeing some of the urban generation in some of the most deprived areas of the City is quite unbelievable. A stroll around Salford Quays is quite jaw dropping. If you have cash available buying of plan can be a fantastic investment, certainly at the moment!
A couple of other points to consider – don’t rely purely on the glossy brochures and CGI artwork. Always ask for the original specification before committing to buy to ensure the developers don’t try to change some aspect of the specification and do your home work on the builder/developer and look at other projects they have undertaken to see how they have developed over time.
Also ensure any last minute “snagging” list is completed before you part with your final payment!
If you would like to understand the process further or are interested in finding out about some fantastic deals around Manchester and Salford Quays, I have a Facebook group https://www.facebook.com/groups/MauriceKilbrideLandlordandInvestorForum/ which you can join or please get in touch with me directly on 0161 428 3663, via e-mail firstname.lastname@example.org or message me via Linkedin