Off-plan property is one that is bought either before or during the construction process.
Although a riskier strategy than buying a completed property, many investors favour this approach because off-plan properties are generally priced significantly below market value. This attracts investors in their thousands because, as well as securing a great deal, there is a potential for capital appreciation as soon as the property has completed, when the property price comes in line with the current market values.
To better understand the process of off-plan, you must first understand the 5 major stages of planning permission:
1. Planning permission varies across local planning authorities (generally local borough or district council).
2. Planning permission application sent off
3. The local planning authority may hold consultations as they decide whether to grant permission.
4. The authority decides whether they’re in favour of the plans. If so, it will proceed, if not, they have to give a valid reason (and plans can then go through an appeal process)
5. Planning permission is granted. Although there may often be a few condition to meet standards, the development now has permission to start being built.
Off-plan is considered risky if the property is being sold without planning permission as the plans can be denied at any point and, even when planning permission has been granted, this does not represent an iron-clad promise that the property will get built.
The way to mitigate the risks posed by off-plan properties is to choose a developer specialising in this kind of property, and do extensive research around this company. What have they built in the past? Have any of their developments been late? How many off-plan properties have they built? What have past investors said about them? All these elements will put your mind at ease that not only are you choosing a reliable developer with a proven track record, but also that you’re choosing the right property for you.
Knight Knox specialise in buy-to-let property because we know the market—we believe that in the current market off-plan properties offer the best returns on investment for investors, not just from the lower-than-average entry prices required to secure a buy-to-let opportunity but also because of the ever-growing rental returns and the substantial capital appreciation investors stand to gain by investing off-plan. Furthermore, Knight Knox only work with four UK developers, all of whom are well-known in the property industry and each have a substantial portfolio of past developments as a testament to both their reliability and the sheer quality of properties they bring to market.
If you invest in a trusted and experienced off-plan provider, off-plan properties can prove to be incredibly savvy purchases that are incredibly profitable in both the long- and short-term.