Buying Off-Plan, What to Know Before You Reserve a New Build

What Buying Off-Plan Means

Buying off-plan means agreeing to purchase a property before construction is complete, sometimes before it has even begun. You commit to buy based on developer plans, showroom apartments, and computer-generated images. Developers use off-plan sales to secure funding and demonstrate demand to lenders before breaking ground.

The Off-Plan Purchase Process

The process differs from a conventional second-hand purchase in several important ways:

• Reservation: You pay a reservation fee (commonly £500–£2,000) to take the property off the market while legal work proceeds
• Exchange: On an off-plan property, exchange often occurs months, sometimes over a year, before completion. You will be asked to pay a deposit of typically 10% of the purchase price at exchange
• Long stop date: The contract should specify a long stop date, the latest date by which the developer must complete. If this date passes, you are entitled to withdraw and recover your deposit
• Completion: Occurs when the property has been built and signed off, typically evidenced by a building regulations completion certificate

Deposit Protection

The gap between exchange and completion creates a significant risk: developer insolvency. Before exchanging, verify how your deposit is protected:

Never allow deposit funds to be paid directly to the developer. They must be held in your solicitor's client account or a similarly protected arrangement until completion.

Structural Warranties

New-build properties in England and Wales are typically covered by a 10-year structural warranty. The most widely recognised is the NHBC Buildmark warranty. Other recognised providers include Premier Guarantee and LABC Warranty. These warranties cover structural and weatherproofing defects for 10 years, with the first two years typically covered directly by the developer.

Snagging

Almost every new-build property has defects that need rectifying after handover. You are entitled to a pre-completion inspection. Commission an independent snagging surveyor to carry out a thorough inspection, this typically costs £300–£600 and can identify dozens of items a layperson would miss.

Questions to Ask Before Reserving

• What is the expected completion date, and what is the long stop date?
• How is my deposit protected?
• Which structural warranty is provided?
• What is included in the specification, and what is not?
• Are there any estate management fees or service charges?
• Can I search the development on Property Passport UK once the address is registered, to verify EPC data and title at completion?