Buying Off-Plan: A step-by step guide

If you’re considering a new-build, developers will often offer you the option of buying off-plan. We look at what buying off-plan means, the pros and cons, mortgage implications and questions you should ask before proceeding.

Angela Kerr Director, Editor

What is buying off-plan?

Buying off-plan means you agree to buy a property before the developer has finished building it. You may even agree to buy it before construction has begun.

11 steps to buying off-plan

1. Check how much you can borrow on a mortgage: Lenders will often lend less on new build properties and some won’t lend if you’re buying off-plan so it’s a good idea to speak to a specialist new build mortgage broker to find out your options and how much you’ll be able to borrow. However, getting a mortgage with a small deposit is possible if you’re buying off-plan if you use a scheme like Deposit Unlock, so do your research.

Buying a new build home? Speak to our partners at New Build specialist mortgage brokers L&C, who can advise on these Government and private schemes. Plus, they won’t charge you a penny.

2. Find your ideal home: There’s different research you’ll need to do when you’re buying off-plan as you’ll be making your decision to buy when it’s partially built or even just from the plans. So do your research on the developers. If the development has been partially completed, ask the neighbours how they found the process of buying their new build home annd visit the developer’s other sites to see how they look. Read more tips in our guide Buying a new build home: essential guide.

3. Get your mortgage in principle: When you’ve chosen your preferred mortgage, get a mortgage in principle. This is a document from a lender stating how much it would lend you ‘in principle’ based on details you’ve provided about your financial circumstances. With our partners at L&C, you can get a personalised Mortgage in Principle in just a matter of minutes. You’ll usually need to show this to a developer before they’ll accept your offer when you’re buying off-plan.

4. Negotiate the best price: Once you’ve found the property you want, make sure you negotiate the best price on it. Developers like to sell properties off-plan because housebuilding is a cash-intensive business and it’s good for their bottom line if they can sell more this way. However, research by Hamptons in May 2024 found levels of off-plan sales were at a decade-low. So there may be deals to be done if you are buying off-plan. Find more tips in our guide Can I make an offer on a new build.

5. Get the best legal help when buying off-plan: Make sure you appoint a conveyancing solicitor who is experienced in the purchase of off-plan properties as it presents different challenges to buying a property that is already built. You can read on for more on this as well as in our guide New build conveyancing explained.

6. Reserve a home: If you want to go ahead and buy a property, it’s time to reserve it. You may need to pay a reservation fee, which typically cost from £500 to £2,000. But before paying a reservation fee, you should have seen copies of the plans and specification which will tell you exactly what you are getting. These should include design, measurements, the type and quality of materials and decorative finishes.

7. Apply for your mortgage: If you are not a cash buyer, now it’s time to get your application in for a new-build mortgage. Do this without delay as you’ll usually only have 28 days to exchange when you’re buying off-plan. If you haven’t already got a mortgage broker, it’s advisable to speak to a specialist new build mortgage broker like our partners at L&C asap. There are potential issues with mortagge offers when buying off-plan. Read on for more on this.

8. Exchanging contracts when buying off-plan: Once you’ve completed all the paperwork and got your mortgage offer it’s time to exchange contracts and pay your deposit.

9. Check your home is finished: So, the wait’s over and your home is nearly ready to move into. You’ll have the right to have a professional pre-completion snagging inspection of your home on your behalf if you’re buying from a developer signed up to the New Homes Quality Code. This should involve an inspection of the property and you’ll get a comprehensive snagging list. This could include anything from cosmetic issues, such as paint touch-ups, to more significant structural defects, such as broken roof trusses.

The PCI report should then be shared with you to pass to your conveyancer and the builder who is responsible for rectifying the issues before the property is handed over at completion. Pre-completion snagging survey costs start at £320. You can book your Pre-Completion Inspection today with our Snagging Experts at NBI. 

10. Completion: When you’re buying off-plan, you cannot set the completion date when you exchange contracts. Instead, you agree to ‘completion on notice’ instead. This means that once the property is finished, the developer will serve notice on the buyer to complete, usually within 10 working days.

11. Sort snags once you’ve moved in: Even if you’ve had a Pre-completion inspection, it’s advisable to have a professional snagging survey once you’ve moved in to pick up any issues that remain in the property.

KEY INFORMATION

Top Advice when Buying Off-Plan

1. Get a good independent conveyancing solicitor – see new build conveyancing
2. Consult an independent mortgage broker to get the best new build mortgage products
3. Arrange an independent snagging inspection

Buying off-plan pros and cons

So in summary, what are the pros and cons of buying off-plan?

Getting a mortgage when buying off-plan

You’ll need to get your mortgage offer in place before you exchange. However, mortgage offers are usually only valid for six months and this may not be long enough if you’re buying off-plan. If your mortgage offer expires, you can ask the lender if they’ll extend your offer although you’ll typically need to reapply. But if you can’t get another mortgage offer, for example if the property’s value has dropped since exchange, and therefore you need to pull out of the purchase you could lose your deposit and be sued by the developer too.

So make sure your conveyancing solicitor writes a long-stop completion date into your contract when you exchange. If the property isn’t complete by the long-stop completion date you can walk away from the purchase and have your deposit refunded. Make sure this long-stop completion date is before the date your mortgage offer expires.

Also, ask your new build conveyancing solicitor to establish if the contract price is ‘locked’ at exchange therefore and, if so, what happens if the price rises or falls before completion.

Bear in mind, some mortgage lenders have special new build mortgages with a longer validity period that can be up to three months longer than their usual deadlines. Specialist new build mortgage brokers will know the products which will remain valid for longer. Mortgage brokers will also be on hand should you need to move quickly to re-apply or find an alternative lender. Read more in our guide New build mortgages explained.

Buying a new build home? Speak to the new build specialist mortgage brokers at L&C, who can access specialist new build mortgage products. Plus, they won’t charge you a penny.

Exchanging contracts when buying off-plan

When you’re buying off-plan, most developers insist that exchange of contracts takes place just 28 days after reserving the property. You need to instruct a solicitor or conveyancer quickly and preferably one that has experience of working on developments like yours so they know the questions to ask. Don’t be pushed into using the developer’s recommended solicitor. Your solicitor should be representing your interests but this could be more difficult if they receive a lot of business from the developer.

When you exchange, you’ll also be asked to pay a deposit on the property. This is usually 10% of the purchase price. At this point you are legally committing to the purchase. As we explain above, you should ensure a long-stop date is written into your contract.

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Buying off-plan and stamp duty

Stamp duty will be payable on your home when you complete on the purchase. The amount you pay is based on how much you have agreed to purchase the property for. So, you’ll pay based on the price you agreed with the developer when you reserved. You won’t pay first time buyer stamp duty in England and Northern Ireland on properties up to £425,000. For properties costing between £425,001 to £625,000 you’ll pay 5% stamp duty, but only on the value above £425,000. Properties over £500,000 follow standard stamp duty rates.

You can use our stamp duty calculator to work out what you’ll owe.

Questions to ask when buying property off-plan

If you are considering buying off-plan, make sure you do your research first. Here are a few questions we recommend you ask the developer before you agree to anything. 

• What happens if the developer goes bust? Make sure your deposit is protected.
• What will happen if the value of the property falls after exchange? This could affect your mortgage offer so it is important to be clear.
• Can I see the planning consent?
• Can I see the lease? If it is a leasehold property make sure you go through the lease with your conveyancer as soon as possible, paying particular attention to the length of the lease, ground rent and other charges, and any restrictions.
• Will there be any estate management charges? Many new build estates are being privately managed, which means the owner will need to pay to maintain shared spaces and playgrounds. Read up on how this can cause problems for owners who live on these estates in our guide New build estate management fees explained.
• Where will the specifications of my property be set out and when will it be agreed? Don’t rely on the glossy brochure. Ensure you understand what you will be getting, in detail. Ask to see plans and detailed specifications as soon as possible. Ask your conveyancer to ensure that anything you require is set out in the contract.
• What is included in the price? Check whether you will have to pay extra for fixtures and fitting such as carpets or turf in the garden.
• When can I see the property before completion? Whether you want to look at the property yourself, get on site with a surveyor to check the place over or get a snagging surveyor in, you’ll want to re-assure yourself the property is finished to a good standard before you complete and take ownership. We would urge all new build home buyers to get a pre-completion inspection and employ your own independent pre-completion snagging inspector. See our guide for more about types of snagging surveys and costs.
• When will the development be finished and what happens if it is delayed? Your property may be part of the first phase so check how long you could be living on a building site.
• Am I tied to a solicitor? Most developers will push you to use their conveyancing solicitors. They will argue it will save you money and the solicitors’ familiarity with the development will make for a speedier transaction.  The problem is that there is potential for a solicitor to have a conflict if they receive a lot of business from the developer.  If you find your own conveyancer, they could look at the documentation afresh and be in a stronger position to stand up to the developer if there are issues that need to be addressed. Get conveyancing quotes now for your own conveyancing solicitor and see our guide to new build conveyancing.

Frequently Asked Questions