Off-Plan – 6 benefits of investing in off-plan property in London

Off Plan – Property investment with growth and income prospects

For those on a restricted budget, or with cash coming their way in a few months (perhaps money from a bonus from work or inheritance), you do not need to wait to start benefitting from property investment. With massive regeneration projects underway across London, investing in property by buying off-plan property in London could prove an ideal solution to exploit opportunities that exist now. When purchasing off-plan property, investors benefit in six ways.

1.    The developer takes the majority risk

When investing in off-plan property in London, you might have a payment contract weighted towards completion; so the developer has an added incentive to complete the property to the agreed timescale and quality. Whether you have a mortgage or are a property investor with cash, you either save on interest payments by drawing down only what you need or make the money you already have (that stays in the bank).

2.    Increase your return on completion

When buying off-plan property in London, your property investment will be made at today’s market value. London property prices grew by an average of 9.4% in 2015. In some areas, investing in property produced capital gains of more than 25%.

Savill’s property experts forecast that investing in property will generate steady returns over the next five years. An investment in off-plan property in London today may have increased in value quite substantially by the time you get to the completion payment due date.

On top of this, you might also be able to benefit from incentives such as purchasing at a discount to the market value when you commit to investing, or white goods and furniture packages.

3.    Four ways to generate investment return

You can benefit from your investment in four key ways:

  1. Renting to tenants to provide an extra source of income.
  2. Remortgaging the property to free up capital (consider the cashflow though)
  3. Selling for more than it cost you.
  4. Flipping the property (buying with the sole aim of selling when it’s complete); or

4.    Property is the new pension

The average pension pot in the UK is just £91,000. Investment in off-plan property in London allows you to invest in your retirement sooner and take advantage of the benefits of gearing to property investment.

Property investment as a pension strategy also has the potential to double your income in retirement– and, unlike pension plans, you don’t have to wait until you retire before you have an income from it. You could start benefitting from positive cash flow from the second you have your first tenant.

5.    Government investment and regeneration in London

The Government invests heavily in London − St. Pancras, Waterloo, Crossrail, schools, hospitals, airport expansion. In fact, all manner of infrastructure projects is either ongoing or in the pipeline throughout London. Investing in property where there is such large-scale urban regeneration is a proven property investment strategy.

6.    Staged Payments

When buying off-plan property in London, you negotiate the price upfront, pay a small deposit, and then make payments throughout the build period until completion. These staged payments enable you to budget your property investment better, and your money is in your bank for as long as possible.

These are just a few of the benefits of investing in off-plan property in London. It’s satisfying to lock in today’s price, know how your cash flow works in advance, and look forward to a possible valuation increase before you have to make that final payment.

With demand for homes in London likely to remain high, it’s also possible that future rental increases will at least match the average 3% rise we’ve experienced over the last 20 years.

Have a chat with us on +44 (0)207 923 6100 today and find out how to invest in off-plan property in London.


David Lines

Brett Alegre-Wood
July 31, 2016

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