Amid all the news that mortgages are unavailable or ridiculously expensive, house prices are dropping and homes are being repossessed, it seems not all property is on a downward spiral. In fact, in London, where the big money is, the demand for property is increasing, particularly around Battersea and Docklands.
Developments are going up all over the place and most are sold well before completion. How is this so? Property developers are selling 'off plan'. Land is a precious commodity in London and buying up even a relatively small piece can see you with a very tidy income once planning is agreed. Investors are keen for a quick turnaround of profits, buying while a discount is possible and selling on as soon as the development is complete. With the demand for accommodation in London as high as it is, they can also afford to hang on to these places for a high rental yield while they wait for property prices to rise again.
Is it just investors that want to buy property off plan? No - there are many owner-occupiers who have caught onto this way of buying a property. If you get it in the early stages of development it is possible to negotiate on deposits, prices and even finished spec.
So, what is off plan and how can you get one?
A developer will buy up a piece of land and secure planning permission on a proposed development. Hoardings will be erected around the land advertising what we can expect to see in the future and contact details. A plush marketing suite will be installed and a push will begin to start selling the properties.
But how can you buy a property that looks like a patch of mud? This is where clever computer graphics comes in with CGI. Computer Generated Imagery is an invaluable source of selling material for a developer. Images are created from 2D plans that truly bring the development to life. Buyers are able to view what will be the finished project before it has even begun, thanks to CGI.
This is one of the things a buyer needs to scrutinise with many aspects in mind. It gives you the chance to look at properties from different angles, to assess the positioning, the layout and even the way the light enters a property. If the CGI includes an exterior view this should determine whether the property you are interested in overlooks a car park, local rubbish dump or has a beautiful view. This won't really make a difference to the value but will determine how easy it is to rent out later on.
If you intend to rent out the property once it is complete, then check out local demand for rental property in the area and while you're there check out the area in general. If regeneration is going on in the area you can be sure demand will be high later on.
House builders Berkeley, say eighty per cent of their developments are sold off plan, half to developers and half to owner/occupiers. They come with the benefits of warranties and no maintenance which are definitely aspects worth considering to avoid future problems.
A property developer will hold a pre-launch event to gauge interest in the development and this will be mainly open to investors. This will be followed by a launch party that will be more widely advertised through estate agents and it is possible for the public to sometimes gain access to these events. If you can get involved, it is a good idea to have a mortgage in principle agreed beforehand so that you are in a position to reserve a property should you so wish to do so. Take a look at the scale models and the CGI and decide on a property.
You can haggle over discounts at this stage and once you have acquired the property the price will probably have increased for you to obtain a quick turnover and decent profit for little outlay. Exchange of contracts will happen quite quickly followed by a completion date. You will have a period of around two weeks to carry out a 'snagging' visit to the property to determine any faults that you want corrected before everything is signed and sealed.
In the slightly precarious property market that we currently have, this is a good way to buy a property at a discounted price and with the aid of CGI, at least you will know what you can look forward to when the development is finished.
Property expert Catherine Harvey looks at the use of CGI to sell property off plan.