Off-Plan vs. Completed Investment Property

Planning your next investment property purchase? Navigating the property market can be complex, with several key decisions to make. Should you opt for a new build or a resale? When is the optimal time to invest? Is commercial or residential property the better choice for your portfolio?

In this latest installment of our At Home With Centrick series, we delve into one of the most crucial decisions facing property investors: the choice between buying a property off plan or investing in a completed development. There’s no definitive “right” answer, as both options present distinct advantages and disadvantages. The ideal choice hinges on your individual investment objectives and how it aligns with your current property portfolio.

What Is An Off-Plan Investment?

First, let’s clarify: what is off-plan property? In essence, an off-plan property is one that is purchased before its construction is finished, or even before it has commenced. Investors buying any property off plan make their purchase based on architectural blueprints, the development’s location, and visual representations of the final product. This is a popular route for those looking into investment property off-plan.

What Is A Completed Investment?

Conversely, completed investment properties are straightforward. Unlike off-plan properties, these units are fully constructed and available for immediate viewing. Simply put, a completed property exists physically, whereas an off-plan property is yet to be built. So, which of these paths should you consider for your next investment?

Benefits Of Buying Off-Plan

One of the most compelling advantages of off-plan property investment is the potential for capital appreciation. These units, upon completion, may be valued higher than their original purchase price. This means investors can effectively secure a property for potentially below market value. Furthermore, if you’re among the early buyers in an off-plan development, you often gain priority in selecting the most desirable unit within the scheme. Additionally, a brand-new off-plan property comes without any prior wear and tear, and there’s no immediate need for updates to appliances or technology – it’s as modern as it gets!

For investors considering living in the property between tenancies or making it their primary residence, buying off-plan properties offers personalisation opportunities. Many developers allow buyers to have some input into the design of their unit as construction progresses, enabling you to create a truly bespoke home. There are also financial benefits to the period between purchase and completion. Investors typically don’t need to finalise their mortgage until around six months before completion, potentially allowing them to wait for more favourable mortgage rates. This timeframe also provides more opportunity to research the best mortgage deals and save for a larger deposit.

Pitfalls Of Buying Off-Plan

However, buying off-plan does carry certain risks, primarily because you are investing in a property that doesn’t yet physically exist. This means you’ll need to wait until the unit is completed to start generating rental income. Moreover, buyers are susceptible to potential delays in the construction timeline, which could impact mortgage agreements, as these are often time-sensitive. Some investors might also feel uneasy about committing to a purchase without being able to physically inspect the property for an extended period. There’s also the inherent risk that a developer could face financial difficulties and potentially go into administration before completion, highlighting the importance of choosing a reputable partner to safeguard your deposit.

Finally, there’s no absolute guarantee that your off-plan investment property will be in a thriving market upon completion. There’s a possibility that the property’s value might be less than what you initially paid. This underscores the importance of consulting with a knowledgeable estate agent like Centrick before making such a significant investment decision.

Benefits Of Buying Completed New Build Property

If you’re hesitant about the uncertainties of buying off-plan, purchasing a completed new build property might be the more suitable option. The most significant benefit is the transparency of being able to physically view the unit, the entire development, and the surrounding area before committing to a purchase. This tangible aspect provides peace of mind for many investors before they make an offer.

Completed properties also come with a reduced risk of time delays. If your goal is to expand your property portfolio quickly or move into a new home promptly, there are numerous readily available, chain-free completed properties on the market. Investors can start generating immediate rental yields by finding tenants right away and beginning to see a return on their investment. Furthermore, securing mortgage offers for completed properties is generally easier, as lenders are more cautious about the potential delays associated with off-plan property development. Therefore, if speed and certainty are priorities, a completed unit might be the best path forward.

Pitfalls Of Buying Completed New Build Property

However, purchasing a completed unit also presents its challenges, particularly if you were hoping to personalise the property to your specific tastes or the preferences of your target tenant. You might also find yourself with a more limited selection of units, as the most desirable ones in new off-plan developments UK are often snapped up early by eager investors. This could leave less appealing units available, which might not meet your investment criteria, and you might end up paying a premium compared to the price you would have secured by buying off-plan.

There are also timing considerations. While completed units are available immediately, this means you’ll need to secure a mortgage as soon as possible. If you do so during a period of market instability or high interest rates, you might not get the best value. You might also face a tight timeframe to find a tenant to ensure you can meet your mortgage payments and avoid a void period with no rental income. If you find a tenant quickly, you’ll likely need to furnish the property immediately, so be sure to factor these costs into your budget.

Ready For Your Next Investment Property?

Ultimately, deciding whether off-plan property for sale or a completed investment is the better choice depends on your unique investment goals, the composition of your existing portfolio, and your specific property needs. This can make the process of finding the perfect investment property a challenge. That’s why Centrick has developed the Earn At Home hub, a valuable resource designed to provide you with the guidance needed to enhance your portfolio’s health and steer you towards making the most informed investment decisions.

Looking for more personalised guidance on off-plan property investment or completed properties? Fill out the form below, and a member of our expert team will be in touch shortly to discuss your specific requirements and help you navigate the world of off-plan investments and beyond. We can help you understand the nuances of property for sale off-plan and guide you towards the best investment for your future.