The Benefits of Buying Off-Plan Property

While investing in off-plan in the UK is a popular property investment venture, many buy-to-let investors are still puzzled about whether they should invest in off-plan properties.

So, what are the benefits of buying off the plan when investing in property?

In this helpful guide, we’ll look at five reasons why you should invest in off-plan property in the UK.

Buying off-plan property in the UK is often cheaper than buying an existing property.

This is because off-plan property developers will usually offer the property at a discounted sale price to try to entice new buyers.

Properties in the UK can be found at up to 55% below market value prices if they’re off-plan.

Due to property market demand, buyers right now are struggling to find properties available to purchase for their asking price – never mind below.

These affordable property prices offered by new-build investments are a breath of fresh air for first-time buyers or buy-to-let investors with a lower budget.

Why Is This One of the Benefits of Investing in Off Plan?

By choosing off-plan properties as an investment, you can buy a property in a desirable UK city for much less than you might pay for a standard property type.

Let’s look at the Liverpool property market as an example. The House Price Index data states that the average price in Liverpool is £187,663 as of October 2024.

A property like SoapWorks Liverpool, a stunning off-plan development, has units to purchase from only £174,950.

Similar findings can be seen in London and Manchester, too.

Property investors who make an off-plan purchase can save money compared to if they purchased an older property.

The money they save could then be put towards another investment, helping the investor build their property portfolio more quickly than they would when buying property with a higher purchase price.

Another benefit of buying off-plan property is the freedom that comes with this investment type. 

Because these properties haven’t been finalised, investors can pick and choose the best units.

For instance, investors can research the different units available and consider whether the dimensions and specifications suit their investment goals.

Suppose a property investor has a specific property in mind that they want to invest in, such as an apartment with a balcony or a spacious en-suite. In that case, the buying process for off-plan property will benefit them.

Why Is This One of the Benefits of Investing in Off Plan?

Since the pandemic, more renters have started looking for homes to rent that feature specific attributes.

By choosing multiple units within a development, you can select apartments with balconies or other desirable qualities like dedicated space to work from home or good city views.

This could help increase demand levels for your investment property and make sure you attract your ideal target tenant quickly, making void periods less likely.

New build homes are some of the most popular in the UK for both homeowners and investors alike.

New properties have aesthetic benefits due to their fresh, modern designs.

Those who favour a more contemporary look in their home, such as students or young professionals, are often drawn to stylish newly built houses and apartments.

Not only do new off-plan homes look good, but they’re also beneficial due to their sustainable qualities. 

Brand-new homes tend to be built with more eco-friendly materials. Research has found that 80% of new homes have an A or B energy-efficiency rating.

Why Is This One of the Benefits of Investing in Off-Plan?

Property investors need high rental demand for their venture to succeed.

By purchasing a property considered desirable by their target tenant, interest from renters will be higher.

Young people are now a lot more conscious of environmental issues than ever before.

A massive 74% of Generation Z consumers have reportedly made changes to become more environmentally friendly.

Increase your likelihood of high tenant demand and attractive rental yields by going green with an off-plan investment.

When you buy off-plan property, you often need to wait many years until the development has been completed and is ready to be tenanted.

The fact you have to wait for the completion of a property that’s off-plan means that you could see the property value of your investment increase even before it’s ready to be lived in.

This is why capital growth is often considered higher with off-plan properties, especially when the development is based in an area with increasing house prices.

Take our past Liverpool project City Point as an example. One unit within this development was first listed and sold for £59,995 in February 2019.

By November 2019, the unit was then resold for £69,995. This highlights a 16% growth in market value within just one year and ahead of the development’s completion in 2020.

Why Is This One of the Benefits of Investing in Off-Plan?

When you invest in property, capital growth is something you always want to look out for.

That’s why it’s a good idea to look for ways to increase your likelihood of capital growth as much as possible.

If you invest in an off-plan property for a below-market value price and then find that once the property is complete, a valuation discovers some impressive capital gains, this is a good sign that you’re in line for even more capital growth in the future.

Remember to always research location when choosing your off-plan property to really get the most out of your potential capital gains.

Another major benefit of buying off the plan property is that you can split payments into separate stages.

Property investors often don’t need to pay for the entire purchase price until the development’s completion date.

A small deposit will be paid upon reservation, along with a percentage of the overall property price.

Investors can then pay another instalment during the construction of the development before their final payment is made upon completion.

Why Is This One of the Benefits of Investing in Off-Plan?

Not every investor is lucky enough to have the total investment funds needed to buy a property straight away.

Many buy to let investors seek out a buy-to-let mortgage to pay for their investment.

However, issues can sometimes arise with off-plan property due to most lenders keeping a mortgage application valid for just six months.

After six months, you may have to fill out the application again if the property is not complete, which can be a hassle.

Having the payments spread over multiple stages can simplify the buying process and mean you don’t have to worry about mortgage repayments further down the line.

Find Out How to Buy Off-Plan Property in the UK With Our Step by Step Guide

Incentives are often offered by developers to help attract users towards investing. This tends to come in a few forms, including:

• Free legal fees
• Stamp Duty relief
• Furniture packers
• And more

These incentives can often make or break an investment opportunity, and prospective investors should keep an eye out for them.

Why Is This One of the Benefits of Investing in Off-Plan?

Developer incentives allow for much easier entry points into investing, especially where the option to save money is concerned.

On top of that, the ROI is all the greater, as you will have made initial savings that could be funnelled back into the property to target higher-paying renters.

Developers also offer the opportunity to build interest on your deposit for the duration of construction. This interest can then be deducted by the developer from your final payment.

Example:

1. You put down a £50,000 for a £200,000 at 3% interest per year
2. The construction takes 3 years to complete
3. At the end of that construction period, you have £4500 in interest, that can be deducted from the final payment

This perk of investment means that investing in a project early is the best way to save money in the long run.

Why Is This One of the Benefits of Investing in Off-Plan?

Investing in properties is all about ROI, and with a perk like this, you can truly make savings that can go towards your next investment. In fact, if you were to save as much as the above example, you may be 10-20% of the way towards your next deposit already.

As with any investment, there are risks to buying off-plan property. Below, we detail some of those risks.

Construction Delays

Even the most reputable developers face construction delays, which can be caused by any number of issues outside of their control. These issues could be anything from labour shortages, material shortages, delays in permit acquisition, and more.

These issues will naturally have a knock-on effect on your investment. For instance, you may have been expecting an ROI within a month or two of the project completion, but if it is delayed, your ROI will also be delayed.

To avoid construction delays, always do your research on the developer before investing. If they have a good track record of completing on time, then you can rest assured your hard-earned investment is in good hands.

Quality Issues with the build

It is rare that build quality issues happen with off-plan investing, but it can happen. 

When the finished property doesn’t match the standards laid out by the developer (whether in design or construction), it can lead to issues like:

• Building safety concerns
• Loss of investor interest
• Damaged ROI potential

Much like with any construction delays, you should always research your developer. When looking at many developers, consider:

• Does the developer offer a warranty?
• Does the developer offer deposit protection insurance?
• Does the developer have a straightforward policy on remedial work?
• What reviews and testimonials does the developer have that can speak to their work?
• What news can you find about the developer that may shine them in a positive or negative light?

Developers going out of business

It can also be the case that a developer may go out of business. Once again, this is a very rare occurrence, but when it does happen it may mean that your deposit and other investments are lost.

The key here is to ensure that the developer is well-established, and offers useful insurance, such as deposit protection insurance. Be sure to research your developer well before making an investment to avoid this risk.

Property price could fall in value

You should always bear in mind the area you are investing in and how it may perform in future.

At RWinvest, we always ensure that our investment properties are in high-performing areas. This ensures that your ROI will always remain strong.

If you invest in areas that are not high-performing, though, you may find that your property price value will drop. This could mean that you find a reduced ROI through rent, or you may sell the property at a lower value than you bought it.

You can’t physically see the property before purchase

It’s natural to want to see the property before it’s built, but for many off-plan investments, that option is simply not available.

This can put some investors off, who may want to completely understand and absorb the property they’re buying.

If you’re ready to purchase your first off-plan property, invest with RWinvest today.

We’re one of the UK’s top property investment companies, specialising in residential and student off-plan developments in high-yield cities like Liverpool, Manchester, and London with below-market prices, excellent rental yields, and great capital growth potential.

Contact us today by phone or follow the link below to kick-start your buy-to-let journey.