Buying a property ‘off-plan’ is something that appeals to many people. Off-plan means a property is still in the planning stage or under construction, and buyers commit to the purchase before the property is built.
The blank canvas of an off-plan property can hold considerable allure for those looking to put their personal stamp on a place. Off-plan properties generally require less maintenance than older properties, are more energy efficient, and have greater warranties, which buyers also see as an advantage.
Latest figures show that in 2021, 37% of all new properties sold in England and Wales were bought before completion.
Buying an off-plan home is most popular among those taking their first steps on the property ladder, with first-time buyers responsible for just over two-thirds (67%) of off-plan purchases, according to real estate agency Hamptons.
Conveyancing on an off-plan flat or house is more complicated than buying an older home and can throw up additional challenges that require specialist legal expertise.
In this blog, our specialist Off-plan Conveyancing Solicitors consider the steps involved in purchasing a property off-plan and the extra problems that can arise.
Off-Plan Conveyancing
The conveyancing process on an off-plan property generally involves the following steps:
Step one: Reservation.
Once you have found your ideal site and studied the proposed development’s plans, buyers secure their desired off-plan property by signing a reservation agreement and paying a fee, which is generally between £500 and £1,000. This is usually deducted from the final purchase price.
Step two: Instruct an experienced conveyancer.
There are various extra risks involved in buying a property off-plan and it is crucial to instruct an experienced conveyancing solicitor with experience in the purchase of off-plan properties at an early stage in the process.
At Onions & Davies, our experienced residential property solicitors advise on all the legal issues encountered when buying a property off-plan and protect your best interests to ensure the property you buy complies with relevant planning and building regulation requirements.
From our main office in Market Drayton our residential conveyancing and property law solicitors support clients across various locations including the towns and surrounding villages of Telford, Shrewsbury, Crewe, Nantwich, Stoke on Trent, Newcastle Under Lyme, Whitchurch, and Newport.
We are accredited under the Law Society’s Conveyancing Quality Scheme (CQS) which provides a recognised quality standard for residential conveyancing.
Being an accredited member of the CQS means that we meet the high standards the Law Society sets to ensure that we give clients a professional and quality conveyancing service.
For more information about how we can help with your purchase of an off-plan property, call 01630 411222 or email david@onionsanddavies.co.uk.
Step three: Mortgage application.
Some lenders are cautious about agreeing to lend on a property that has not yet been built, and it can be more difficult to secure a mortgage on properties that are bought off-plan.
Most mortgage offers last three to six months. Depending on how long an off-plan property takes to construct, an offer can sometimes expire before the purchase has been completed. Buyers of off-plan properties should be aware of this as they may need to reapply for a mortgage while the purchase is ongoing.
Changes in interest rates, lending criteria and your own circumstances can affect any revised offer and affordability. It is important you try to ascertain an approximate build-complete date and try to get your lender to ensure the expiration date of the offer extends beyond the estimated completion date.
Step four: Exchange of contracts.
For an off-plan property purchase, contracts are exchanged much earlier in the process. Some developers require contracts to be exchanged within 28 days of the initial paperwork being received by the buyer’s solicitors.
If this isn’t achieved, buyers may risk losing their reservation fee and the sale falling through. Therefore, it is important you instruct solicitors at the earliest opportunity.
Step five: Legal checks.
In addition to the usual standard searches involved in a property purchase (local authority, water and drainage, environmental), a conveyancing solicitor will conduct a thorough review of all contracts, insurance documents, planning permissions, legal agreements with the local authority and guarantees associated with your off-plan property.
In the past, roads, pavements and grassed areas were adopted by the local authority and maintained as part of council tax revenue. It is increasingly common for builders to retain ownership of the roads and grassed areas that serve the development and then transfer these to a management company.
All homeowners then have to pay an annual service charge to maintain these areas. It is vital you check to see what arrangements are in place and be provided with a budget and anticipated annual costs to ensure affordability.
Your conveyancer will also identify and flag any potential issues or queries to the appropriate authorities and safeguard the new construction project by confirming the availability of suitable insurance coverage.
Although a full structural survey is not always possible on a property bought off-plan, buyers are encouraged to undertake a snagging survey before completion to identify any defects and highlight any potential issues to the developer.
Step six: Completion.
Many off-plan properties take many months or even years for a developer to finish after a buyer has committed to a purchase, making a completion date difficult to confirm.
Instead, when buying a property off-plan, buyers commit to a ‘completion on notice’. This means that once the property is finished, the developer will serve notice on the buyer to complete, which is usually within 10 working days.
Conveyancing Solicitors Near Me
Conveyancing on off-plan properties is more complicated than older residential property purchases and specialist legal advice is vital.
At Onions & Davies, we understand the stresses involved and will work closely with you, the estate agent and your mortgage adviser to achieve a smooth and efficient move.
Our experienced residential conveyancing solicitors can provide specialist advice and guidance on all property sale matters, including:
- First-time buyers.
- Buy-to-let.
- Buying at auction.
- New developments.
- Joint Property and co-ownership.
- Land sale and purchase.
Onions & Davies has provided exceptional property law services in Shropshire, Cheshire, Staffordshire, and beyond for many decades. Our residential property team has the depth of knowledge and experience needed to assist you with all your conveyancing needs and to guide you through the entire process.
Our conveyancing department is headed up by David Williams, a highly experienced solicitor with a career spanning more than three decades.
For more information about off-plan property conveyancing or to speak David or one of our other specialist Property Law solicitors, please email david@onionsanddavies.co.uk or call 01630 411222.