Is it time to invest in off-plan property?

October 6, 2022

Investing in off-plan property has numerous advantages, and the current conditions are making it an even more enticing approach for property investors.

Buying a property off-plan - before it has been built - is a popular investment strategy, but there are a few factors at play at the moment that are making it even more appealing for investors.

One of the major draws of the off-plan model for many buyers is its fixed price, and this is particularly beneficial during times of variability. While property for sale on the open market often sells for higher than the asking price, and can even end up in a bidding war, off-plan properties are marketed at a set price - which can be negotiable.

This allows the buyer to have more financial certainty and stability when it comes to knowing what the costs are. There are also no hidden costs that could crop up, such as renovation or maintenance work, as everything in the property is brand new.

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Future-proofing your investment

Aside from the costing certainty, environmental issues combined with soaring energy bills are making new-build properties more attractive than ever.

For investors looking to future-proof their assets, buying a new-build off-plan means securing a lower price than a built property, while ensuring it already reaches top standards in terms of energy efficiency.

New-builds are built using modern building techniques and materials, and tend to come with modern appliances installed. From an environmental perspective, one study by the Home Builders Federation (HBF) revealed that 2.38 tonnes of carbon are being saved per new-build house, per year, when compared with an older property.

One thing that buyers - and tenants who might rent your property - are increasingly looking at now is the Energy Performance Certificate (EPC) of a property. In a study completed earlier this year by the Department for Levelling Up, Housing and Communities, it was found that between October and December 2021, 84% of new-builds were given an EPC rating of A or B - the highest classification available.

This is particularly impressive when considering the fact that only 4% of existing properties achieved an A or B rating, while 81% of existing properties were rated C or D.

Despite Prime Minister Liz Truss’s assurance that the typical household energy bill will be capped at £2,500 annually, costs are still climbing rapidly, meaning that energy efficiency is extremely high up on people’s agendas.

In a study by Nationwide, based on the April 2022 price cap, bills in properties rated A-C in their EPCs were an average £1,700 per year, while those in the F-G tier were around £3,900 per year. As energy prices continue to rise, this price gap will be even more pronounced, and will make a huge difference to occupiers. Therefore, investors opting to buy an off-plan new-build could be ensuring that their property is going to remain buoyant, rentable and sellable in the long-term.

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‍Some of the other major benefits of buying off-plan

Financial: You get the best price before the property is completed, with the best scope for maximum returns
Capital appreciation: They can go up in value even as you wait for it to be built
Personalisation: You'll be the first person to own the property, so can really put your mark on it
Ongoing costs: Repairs and maintenance costs should be zero or minimal for the first few years, as everything is brand new
New home warranties: There's the NHBC’s 10-year warranty, as well as warranties and insurance for new homes from other companies
Lower bills: Whoever lives there - you or a tenant - will benefit from cheaper running costs and higher energy efficiency than an older home

If you’re interesting in investing in off-plan property or want to know more about what opportunities we’ve got available, get in touch with our team today on 01625 725 779, or email us at contact@theprestburyadvisory.com