We’ve analysed hundreds of off-plan property deals and come
up with a list of the most important questions that first-time investors
neglect to ask.
Here are the seven key questions that you should ask when
buying a property off-plan, and throughout the process of building your
property portfolio.
1. How much are
the reservation fee and deposit?
The reservation fee is the amount you pay to reserve your
new build. This is between £500 and £2,000. The next payment you’ll make is the
deposit: usually around 10% of the final price.
2. How secure is
my deposit?
Your deposit will be paid to the developer's solicitor or a mandated authority, but
they should hold it in a separate client account. Depending on the contract for
sales and purchase the deposit may be releasable or be held with the solicitor.
Generally, only the first 10% of the deposit is protected by schemes It helps to protect you should anything go wrong. Your
solicitor should check that this is the case, too.
If your deposit is going to be more than 10% then your
solicitor should check that there is additional coverage of the deposit or that
you are aware of the risks.
3. Will the layout
be identical to the ‘showcase’ property?
Most developers will have a model property to illustrate the
build, as well as provide brochures and plans to describe the off-plan property
you’re buying. Ask how your property differs to the model, and if the finishes
(fixtures, fittings, and décor, for example) are identical. One of the
advantages of buying property off-plan is that you’ll have some leeway to
negotiate and personalise the finished product.
4. When will the
property be completed?
Of course, you’ll want to know when the property will be
completed and ready to let. However, you should also ask if there are any
clauses that penalise the developer for late completion. There should be a
clause that gives you the option to walk away (and have your deposit returned)
should the developer not complete when it says it will.
5. What happens if
the property market falters and house prices fall?
This is something that is out of the hands of the developer.
Once you’ve paid your deposit and the ball is rolling, you’re obligated to
complete (providing the developer sticks to its side of the bargain).
Interest rate rises and property price falls are part of the
cycle of property prices. You should take advantage of the benefits of using a
buy-to-let mortgage broker broker, who will be able to get you the best deal
for your individual circumstances and investment objectives.
6. What is
included in the price?
Always make sure you know what is included in the price. The
fixtures, fittings, furnishings, and white goods are shown in the developer’s
glossy sales brochure often include upgraded items. Make sure that a parking
space is included if advertised. Ask about rental guarantees, too.
7. How can I make
certain I get great tenants?
In truth, you can never be sure that your buy-to-let
investment will attract the best tenants. However, if you’ve done your research
and due diligence you’ll have made your investment in an area that benefits
from the strongest property fundamentals.
Consider professionally managing your investment property
via a professional property management company to take the stress out of
finding the best tenants and make the day-to-day side of property management as
effortless as possible.
Finally…
Only buy off-plan property with developers who have a good
track record of completing on time. Remember you’re looking to build a property
portfolio for the long term. You should look to work with companies with
extensive experience and where you can easily check records through client
testimonials and recommendations.
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