Why off-plan property investment is a high-risk move
With the pound sinking against the dollar this week, many expats are rushing to convert their non-GBP savings to take benefit from the drop and a surge in expats’ interest in GBP (Great Britain Pound) investments. Off-plan UK property is a commonly offered investment option and is being promoted with greater intensity in the wake of the GBP shift. Our Managing Partner, Chris Ball, observing this activity had this to say:
“A word of advice to people buying off-plan property in the UK due to GBP being low against almost every other currency. Always buy property that is complete or close to completion (6 months or less) so your mortgage offer is valid. At Hoxton, we will only consider such property investments for our clients and there are incredibly good reasons for that.
The UK is going to go through huge changes with interest rates going through a time of volatility. Buying a property that is not finished for 3 years is extremely risky.”
1. Mortgage rates may change
Mortgage terms and offers are likely to change during that time – you may not be able to get finance in 3 years’ time.
2. Delayed completion or cancellation of the project
There are situations when the project can get cancelled or terminated before completion, resulting in buyers losing the money they have paid so far. Developers can go bankrupt – A well-known developer who had been allowing clients to make monthly instalments went bankrupt this week taking substantial amounts of clients’ money with them.
3. Quality may not be what you expected
Show homes and brochures can look very appealing to investors, the actual finished product might turn out completely different.
4. No immediate returns
One of the disadvantages of buying off-plan property is that investors will not see immediate returns until the property is complete. On the other hand, if you invest in completed UK buy-to-let properties, you will see results almost immediately from rental returns.
What to do
If you want to understand the risks before buying and understand the importance of not buying something that is years away from completion, contact our expert team of property advisers, James Stanton or David Broadway, to make sure that you do not get left high and dry like so many expat investors are now.
“Property is an unregulated sector, developers and sales agents can seem reputable but have truly little accountability to you the investor if things go wrong,” said Ball.
- Get in touch today
- Download our FREE UK buy-to-let property guide
- Watch our latest property investment webinar with James Stanton.
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