Buying an off-plan house: a step-by-step guide

• Off-plan means buying before a property is built, based on plans rather than seeing the finished home
• Fewer lenders offer off-plan mortgages with stricter criteria and often larger deposits required
• Completion takes months or years with flexible dates, not the usual 8-12 weeks
• Use an experienced new build conveyancer and ensure contracts include long-stop completion dates
• Book professional snagging surveys before completion to identify any defects or issues

If you’re thinking about purchasing a new build, developers may offer you the option of purchasing off-plan. We’ll look at what buying a property off-plan means in this step-by-step guide, the pros and cons, and what else to consider before deciding if an off-plan property purchase is for you.

Buying off-plan means purchasing a property before it’s been built, or while it’s still under construction. You’re essentially buying based on architectural plans, computer generated images or models, and show homes, rather than being able to see the finished property.

When you might encounter off-plan purchases:

Most commonly, you’ll find off-plan opportunities with new build developments where developers want to secure sales early to fund construction. This could be anything from single houses to entire apartment blocks or housing estates.

How buying off-plan differs from buying an existing property:

The key differences between buying a new build vs an older home include:

Timing: Instead of the typical 8 to 12 weeks to completion with existing homes, off-plan purchases can take months or even years to complete, depending on the construction timeline.

What you’re buying: You’re committing to purchase based on plans, specifications, and promises rather than a physical property you can inspect.

Contract terms: Off-plan contracts include specific clauses about construction delays, specification changes, and “completion on notice” rather than fixed completion dates. Make sure you understand all of these before committing.

Conveyancing: The conveyancing process and timeline for new builds work differently from existing properties as it is more complex. You’ll need a conveyancer with new builds experience.

Learn more: New build conveyancing explained

Mortgage considerations: Some lenders won’t offer mortgages for off-plan purchases, and those that do often have stricter lending criteria or shorter offer validity periods.

Deposit timing: While you'll pay a reservation fee upfront, your main house deposit is typically paid when you exchange contracts, which happens much earlier in the process than with existing properties.

1. Research your finances and mortgage options

Start by understanding your financial position and mortgage options, as off-plan purchases have different requirements from standard property purchases.

Check lending criteria: Not all lenders offer mortgages for off-plan purchases, and those that do often have stricter criteria. Some require larger deposits or impose strict restrictions on the construction timeline.

Understand deposit requirements: You'll typically need at least a 10% deposit, though some lenders may require 15-20% for off-plan purchases. Factor in the reservation fee (usually £500-£2,000) that you'll pay upfront.

Get early mortgage advice: Speak to a mortgage broker who specialises in new builds early in the process. They'll know which lenders work with off-plan purchases and can guide you through the timing requirements.

2. Research developers and developments

Since you’re buying based on plans or a partly finished property, thoroughly researching the developer is crucial.

Vet the developer: Check their track record by looking at previous developments, reading reviews from other buyers, and verifying they’re registered with the relevant industry bodies like the National House Building Council (NHBC). Check out other people’s experiences online by researching reviews and testimonials.

Review plans and specifications: Carefully examine architectural plans, material specifications, and finish details. Ask questions about anything that’s unclear or vague.

Visit existing developments: If possible, visit the developer’s completed projects to see the quality of their work. Speak to residents about their experience during the buying process and after moving in.

3. Get a mortgage in principle

A mortgage in principle (MIP) is essential before developers will seriously consider your offer on an off-plan property (unless you’re a cash buyer).

Developers want proof you can secure financing before taking their property off the market, especially given the longer timescales involved.

Most developers want to see a MIP before accepting your offer to ensure that you’re a serious buyer with access to the necessary funds.

4. Make your offer and negotiate

Off-plan purchases often provide more room for negotiation than buying existing properties.

Pricing considerations: Make sure you get the best price on your off-plan property. House building is a cash-intensive business, developers will want to sell as many properties as quickly as possible.

Available incentives: Developers might offer incentives like help with legal fees, furniture packages, or upgraded fixtures and fittings. Always negotiate these as part of your overall deal.

5. Instruct your conveyancer

Choose a conveyancer with specific experience in off-plan and new build purchases, as the process is more complex than standard property transactions.

Why specialist experience matters: Off-plan conveyancing involves reviewing construction contracts, understanding building warranties, and navigating completion on notice clauses.

Key questions your conveyancer should ask: They should clarify construction timelines, specification change procedures, what happens if completion is delayed, and your rights if the developer fails to meet their obligations.

6. Reserve your property and pay the reservation fee

Once your offer is accepted, you'll need to pay a reservation fee to secure the property.

Reservation agreements: This legal document outlines the terms of your reservation, including the fee amount, reservation period, and conditions for refunds.

Key terms to understand: Pay attention to the reservation period length, circumstances where your fee is refundable, and what happens if construction is delayed beyond agreed timescales.

Learn more: What is a reservation fee when buying a property?

7. Apply for your mortgage

With your property reserved, it’s time to submit your full mortgage application.

Timing considerations: You'll typically have 28 days to exchange contracts, so apply for your mortgage immediately after reserving. Off-plan purchases can't afford delays in the mortgage process.

Special requirements: Your lender will need to see the reservation agreement, property plans, and construction timeline. Some lenders may require regular construction progress updates.

8. Exchange contracts

Exchanging contracts on an off-plan purchase involves additional considerations compared to existing properties.

Your contract will include clauses about construction delays, specification changes, and completion on notice rather than a fixed completion date.

Ensure your contract includes a long-stop completion date. If the property isn't finished by this date, you can withdraw from the purchase and get your deposit refunded.

You'll typically pay a 10% deposit when exchanging contracts. At this point, you're legally committed to the purchase.

9. The waiting period

After exchange, you'll wait for construction to complete, which could be several months or even longer.

Stay in regular contact with the developer for updates on construction progress. They should provide regular updates on timelines and any potential delays.

Use this time to plan your move and ensure your mortgage offer remains valid. Some lenders offer extended mortgage offers for off-plan purchases.

10. Pre-completion inspection

Before completion, arrange for a professional snagging survey to identify any defects in your new home.

Professional inspection: Hire a qualified snagging surveyor rather than inspecting the property yourself. They're trained to spot issues that untrained buyers often miss.

Comprehensive reporting: You'll receive a detailed report of any defects, which you can present to the developer for fixing before completion. Professional reports carry more weight with developers than informal complaints.

Timing: Book your inspection as soon as the developer says the property is nearly ready, allowing time to address issues before completion.

11. Completion

The final step is completing your purchase and getting the keys to your new home.

Completion on notice: Unlike standard purchases, you can't set a fixed completion date. The developer will give you notice (usually 10 working days) when the property is ready for completion.

Final checks: Do a final walk-through to ensure any snagging issues have been resolved and the property is ready for occupation.

Moving in: Once completion occurs, you'll receive the keys and can move into your new property.

There’s a lot to consider when thinking about buying an off-plan property. Let’s break down the potential pros and cons to make it easier:

Benefits of buying off-plan

Brand new property: You'll be the first person to live in your home, with everything from appliances to carpets being completely new and unused.

Potential discounts: Developers often offer discounts or incentives like upgraded fixtures, furniture packages, or help with legal fees to secure early sales.

Customisation options: Depending on the construction stage, you may be able to influence internal layouts, choose finishes, or upgrade fixtures and fittings to your preference.

No chain complications: Off-plan purchases don't involve property chains, reducing the risk of your purchase falling through due to other buyers' problems.

Modern specifications: New builds come with contemporary features, energy efficiency, and modern safety standards that older properties may lack.

Potential drawbacks of buying off-plan

Uncertainty about the finished product: You're buying based on plans and promises rather than seeing the actual property, which may not match your expectations.

Construction delays: Building projects can be delayed due to weather, supply chain issues, or planning problems, potentially affecting your moving timeline and mortgage offer validity.

Limited mortgage options: Fewer lenders offer off-plan mortgages, and those that do often have stricter criteria and shorter offer periods.

Potential for specification changes: Developers may need to alter specifications during construction, and you might have limited recourse if these changes affect your decision to buy.

Financial commitment risks: If property values fall between exchange and completion, you're still committed to the original purchase price, and your deposit is at risk if you can't complete.

When buying off-plan might be right for you

Off-plan purchasing could suit you if you’re not in a rush to move, want a brand-new property, and are comfortable with some uncertainty about timelines. It’s particularly appealing if you’ve found a development in a desirable location at a competitive price, or if you want input on the property’s finish and fixtures.

However, avoid off-plan purchases if you need certainty about moving dates, prefer to see exactly what you’re buying, or are uncomfortable with the additional complexities and risks involved in the process.

Before committing to an off-plan purchase, ask these essential questions to protect your interests and avoid potential problems.

Developer track record

• How many properties have you built in the last five years?
• Can you provide references from recent buyers?
• Are you registered with the NHBC or similar warranty provider?
• What's your typical timeline from start to completion on similar projects?
• Can I visit your other completed developments?

Contract terms

• What's the long-stop completion date, and what happens if you miss it?
• Under what circumstances can you change the property specifications?
• What happens if construction costs increase during the build?
• Are there any penalty clauses if I need to withdraw from the purchase?
• How is the completion price locked in, and what happens if property values change?

Completion timescales

• What's your realistic expected completion date?
• How much notice will you give me before completion?
• What happens if completion is delayed beyond the long-stop date?
• How often will you provide construction progress updates?
• What contingencies do you have for weather delays or supply chain issues?

What happens if things go wrong

• What warranty coverage comes with the property?
• Who handles snagging issues, and what's your response timeframe?
• What happens to my deposit if your company faces financial difficulties?
• Do you have insurance to protect buyers if the project fails?
• What's your process for handling buyer complaints or disputes?

Getting clear, documented answers to these questions before signing anything will help you make an informed decision and avoid nasty surprises later in the process.

What happens if I change my mind after paying the reservation fee?

Reservation fees are typically non-refundable if you simply change your mind. You'll only get it back if the developer fails to meet their obligations or breaches the reservation agreement terms.

Can off-plan purchases fall through after exchange?

Once you've exchanged contracts, you're legally committed to the purchase. Pulling out after exchange means losing your deposit and potentially facing legal action from the developer for damages.

Do I pay stamp duty on an off-plan property purchase?

Yes, you'll pay stamp duty on off-plan purchases, but it's calculated on the agreed purchase price when you complete the transaction, not when you exchange contracts or pay the reservation fee. The stamp duty rate depends on whether you're a first-time buyer and the property's value.