Off-plan property the best investment for the property investors?

Brett Alegre-Wood
June 6, 2016

Reasons to invest and reasons to take care

When you speak to sales agents, you will rarely find one that paints anything other than a rosy picture of buying London off plan developments. Certainly, as a property investment strategy goes, and when it comes to buying in London, off plan developments have many advantages. But there are also risks.

Here at Gladfish we’re happy to discuss these risks as well as the advantages: we believe that every property investment should be made with the benefit of a well-researched and balanced view.

5 advantages of off plan property investment

There are plenty of advantages to the property investor who buys on London off plan developments – and not all of them are financial. Here are just five of them:

1.     Locking in a discount to market value

With property prices rising strongly in London, off plan developments offer the property investor a chance to lock in a price today; several months (or perhaps even a year or more) before needing to part with the purchase price. By that time, prices might have risen and provide an immediate capital gain.

Plus, off plan developments are often sold at a discount to current market value – so the property investor’s profit margin increases even further.

2.     Best property choice

As part of a property investment strategy, getting in early offers a number of advantages – not least of which is the ability to pick the best plot available, and that will be a big benefit when it comes to finding a great tenant and charge the highest rent.

3.     Time is on the property investor’s side

Because you are buying so far in advance of completion, you can manage your property investment strategy with greater ease. For example, you might have an inheritance or profit from another investment, release of a trust fund, or bond maturing in, say, 12 months; you can invest in property now, taking advantage of a discount while being in the positon to pay in a few months.

And what if you find a great location, but would be clobbered by capital gains tax by selling another investment or property to finance the new purchase? Off plan property as a property investment strategy also enables you to better manage your tax affairs.

4.     The property will be completed how you want it to be

You’ll have options as to finish, colours, fixtures and fittings. That’s a big bonus when it comes to getting the best resale value or rental price.

5.     New property sells faster

When the property is completed and becomes part of your property portfolio, it’s new. Never lived in. This, again, is a bonus for the property investment who wants to sell and bank a capital gain.

3 disadvantages of off plan property investment

Here are three disadvantages of a property investment strategy that concentrates on London off plan developments.

1.     Committed without sight

A property investor relies solely on the plans and specifications of the developer. If details change between putting down the deposit and completion, then you might find the property is no longer as desirable.

2.     Time could work against the property investor

In London, off plan developments have historically performed well. However, the longer the time between deposit and completion, the greater the potential the market could turn south instead of continuing to head north. If the market does begin to fall, you could be locked into an investment opportunities that fails to perform as expected.

3.     It could be difficult to sell early

If you find yourself in a position where your circumstances have changed, and you need to sell quickly before completion, your options to do so might be restricted.

Minimise the risks and maximise the gains

As you can see, there are both advantages and disadvantages of using off plan property within a property investment strategy. The educated investor will use strategies that reduce risks while maximising profits.

As always, the team are here to talk you through anything you need, we’re here to support you through whatever is happening in the market. Call our team on +44 (0)207 923 6100.

Live with passion and fun,

Brett Alegre-Wood


Off Plan Property Investment, Property Education

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