Many people are unsure of where to start with purchasing new build homes and conversions off plan. What questions should you ask? What should you look out for? With that in mind, we have devised a top 5 list of the things to consider before purchasing off plan from any property development company.
There has been a lot in the news lately about this and people need to be aware of which they are entering into and what to expect. Typically, most houses are freehold and therefore the purchaser has full control and the land is free from hold. Therefore, the owner can use the land as they see fit (within local regulations for that area and use class). Leasehold is typically found on blocks of flats and the purchaser owns the property for a fixed term (the length of the lease). The leaseholder owns the property for this term, but not the land on which the property resides. (Hence a yearly ground rent can be paid). For new builds, a reasonable and good leasehold term for flats can be typically 125 years and ground rent can be anything from £150-£350 on average (depending on location). Freeholds will not have to consider these costs and terms.As a guide when purchasing a leasehold property, make sure the term is more than 80 years minimum, as this is where renewal costs can become costlier.
Again, when purchasing flats in blocks or leasehold properties, there could be annual maintenance/ service charges.
Service charges are levied by landlords/freeholders to recover the costs they incur in providing services to a building. The way in which the service charge is organised is set out in the lease agreement. The charge normally covers the cost of such matters as general maintenance and repairs, insurance of the building and, where the services are provided, central heating, lifts, porters, lighting and cleaning of common areas etc. For example, the heating and lighting in communal hallways. The charges may also include the costs of management for a professional managing agent and for contributions to a reserve fund to cover unexpected future works to the block. Such as lift repair or roof repairs. Maintenance/ service charges can be anything from £400- £2,500 p.a. This is obviously dependent on where in the country you live and the standard of property and if there’s additional amenities in the property. Such as a lift, a gym, swimming pool etc. It is important to way up the cost of these charges against the location, standard/ specification and number of units in the block of property.
Naturally with buying off plan it is unlikely you will be able to view what you are purchasing. Sometimes there will not even be a show home ready. But that shouldn’t put you off. You will be able to gauge the quality of what you will be buying from past projects the developer has completed on similar schemes. Therefore, its important to ask to see examples of these. As well as any CGI’s and images of the properties they could show you. Lastly, find out what suppliers they use for their kitchens and bathrooms. This way you can also pop to see the showrooms of these suppliers as well. By doing your due diligence on the design specification you will be able to paint a much better picture of what you can expect from your new property, which will help make your buying decision much easier. Remember, all standards will meet up to date building regulations and suppliers should have the usual guarantees and warranties.
These are the key starting point to help paint a picture of the property you are purchasing. Go through these step by step and don’t be afraid to ask questions, even if they seem obvious. For flats this will likely be a lot simpler, as they are usually a smaller scheme than a house and variations of layouts will naturally be limited. Houses may need to be looked at more closely to see if they meet your personal requirements. Do consider room sizes. Also look at the site plan, this will give you an idea of the parking situation (If there is off road parking), as well as any outside space that may come with the property. Lastly, don’t be afraid to ask if alterations can be made to layouts whilst the property is in construction. Sometimes developers allow changes to be made (subject to structural engineer and building regulations approval). These changes can sometimes come with a slight uplift in cost, but if it helps improve the property to your liking, it can be worth it. This is one of the good benefits of buying off plan and can help put your personal touch on your new home or property.
When buying off plan developers at times can offer a discount on price or fix the price even if the market moves on. This is a great advantage when buying off plan, as you know that the properties have to meet the latest regulations and typically come with guarantees and certified sign offs, (which is much more than you would get with a second home purchase). But you could also benefit from capital growth before you even move in. So reserving a flat a number of weeks or months off plan has its advantages, especially when reservation fees can be minimal and refundable on occasions. Therefore, it’s important to check what the reservation fee is and what the terms are if for whatever reason you were unable to proceed with the purchase. Obviously it’s important to note that markets can go up and down in the short term, which is another good reason to understand and way up the terms of reserving off plan. However, this consideration on market is also the same for buying any property, regardless of whether it’s off plan.
So there you have it… This is just a quick summary of some of the things you should consider when buying off plan. It’s always important to do further research into areas you are unsure about, to help you make a more informed decision and if there is any way we can help, do get in contact.