The London Property Market has long attracted interest from across the globe, few other markets attract the same volume of headlines as the English capital through its enduring appeal as a leading city of culture, education, history, architecture, shopping and recreation; mix this with the safe-haven status and a welcoming approach to overseas investment and you begin to understand its enduring appeal.
In this highly competitive market, vendors and purchasers continually question where to position themselves in order to secure the best deal. One means of circumnavigating an amount of the stress in the purchase of residential property in London is through an off-plan transaction, which we often see in Asia and which our International Residential Department specialises in.
Let me quickly summarise some of the advantages of this form of purchase:
- An un-emotional vendor – Buying direct from a developer means there is no need to second guess another individual’s emotion on a property sale, typically developers are very clear in what is acceptable and strike or reject an offer at speed
- No gazumping – Once a deal is agreed, the deal is final (pending the purchaser’s due diligence via their lawyer), the vendor is bound not to consider any further offers on the property
- Clean delivery of the property – The vendor has agreed specifications to meet upon handover, leaving no grey areas as to the condition and contents of the property upon receipt
- Warranty and Insurance – Any new home is typically covered for a period of 10 years following completion for defects
- Management ease – For any landlord the running of a new build property often proves less stressful than that of second hand property as problems and defects increase in likelihood over time, tenants often view this favourably too when searching for a new home
- Payment structure – An off-plan home is secured with a deposit in advance of completion, these typically range from 10% to staggered payments cumulating to 30%, meaning the property can be subject to capital growth without the owner having off-set the full balance of the funds
- Ease of transaction – Everything can be handled comfortably from a remote location so holidays, flights and time are not required in the same manner that they may be when exploring the second hand market
However as is often the case there are potential pitfalls to consider:
- Is the price fair? Sometimes it can be harder to assess value from a brochure than it is with a built property, due diligence is required to ensure you’re not overpaying or indeed, to spot an opportunity
- It’s not tangible – As the property may not yet be finished you cannot touch or feel in the same way as a built property, nothing can compensate for this aside from an opportunity cost which is often afforded by purchasing prior to completion
- Values can also drop – Just as the value can rise throughout the construction period, if the market takes a downturn the completed value may also be less than the price initially paid
Advice to a potential purchaser:
- Be prepared – study the market you’re looking to enter, compare and contrast competing schemes alongside the second hand market, nobody will care more about your purchase than yourself, ensure you’re best informed and trust your own judgement
- Take advice and choose its source carefully – find trusted partners to work with, look for personal recommendations before deciding who to work with
- Agent – Do they have a strong track record? Are they professional? Do you feel confident working through a transaction with them? The agent should guide you through the process.
- Lawyer – Any purchase will have a purchaser’s lawyer attached, ensure you’re working with someone who you’re confident can protect your interests
- Finance – If a mortgage is required ensure you’ve taken all steps to know you’re in a comfortable position to get finance when it’s needed
- Be prudent – Don’t stretch yourself, don’t factor in growth you’re not certain of, be certain you’re happy with the property you’re buying on the terms upon which it’s being offered
- Know your seller – Most importantly ensure you’re comfortable with your seller. What is their track history? Do they inspire confidence? Have they developed similar products before?
As with any property purchase there are many factors which contribute to its success, however off-plan purchasing can provide access to markets which are otherwise difficult to transact in and these principles apply to most forms of off-plan transaction regardless of the market.
Get started on your search with Landmark Place, set on the picturesque River Thames, near the Tower of London and Tower Bridge.