What Not to Do When it Comes to Investing in Off Plan UK Properties?

  • July 17, 2021

What Not to Do When it Comes to Investing in Off Plan UK Properties?

The UK property sector has been brimming with several incredible investing opportunities, despite economic and political turmoil stemming back a decade. The real estate sector has to bear the brunt of 2008 financial crisis, three general elections, the EU referendum and now the global pandemic. However, when it was rife that UK property sector may have taken a downturn amidst Brexit and COVID-19 led uncertainty – the property market continued to accelerate and relayed positive signals. The positivity led seasoned investors to stick to their investment plans but also inspired several new investors to embark on the new journey.

Investment is not just when and where…

The majority of newbie investors tend to look at investment trends and play their cards considering when and where to purchase based on the established facts. However, UK real estate agents opine that one must assess what type of property investment can best align their investment plans. It can be a fixer-upper, a family home, a 2 bedroom family rental house, an apartment, a commercial or off plan property. The UK off plan properties seems to be unexplored territory for many investors, even though investors have made sure and positive returns from this market. However, like all other sectors, there are common pitfalls that you need to avoid when it comes to investing in off plan UK properties.

Jumping on the bandwagon without research…

One of the common tactics that real estate agents and brokers use is to entice you to the limit and pressurize you to take a leap. There should be a distinction behind taking a leap and jumping on the bandwagon and the difference is proper research and planning before making any decision. “Look before you leap” is also a common adage, which means keep your emotions off-limit and make a plan before investing in the property market. Regardless of how tempting an offer is or how much you are being pressured into, be a prudential investor and think of every perspective of the deal before signing any contract. You cannot see an off plan property but what you can see is the price of a property, neighbourhood, future costs, developer’s track record, the growth potential of area and so on. Do not make any decision under pressure and do not rush, when it comes to real estate investment.

Not buying an under market value property…

Real estate investment is for those who can hold on to their investment decision and wait but the sector is full of desperate sellers (especially for off plan UK properties). They cannot wait too long to see a project to be developed and want to bail out to recover their investment amount. They want to sell quickly at a discount and price is not their main concern. Buying an Under Market Value property gives you instant equity that you can also sell ahead, if you want to recover your money in the short term. If you do not want to keep the property that you bought on discount, you can sell it ahead without waiting for prices to be increased – as you can make profit from the discount that you got. However, do not make a hasty decision, and it is imperative to conduct thorough research on comparables especially about the location, budget and future of the project.

Not having an investment strategy…

Are you a savvy investor with a plan to invest and hold? Though investing in off plan properties in UK require a personal strategy based on your financial goals, current situation and investment plans with funds on hand. Understanding all these pointers will help you structure a strategy and what step you can take, considering your funds. For instance, you have a meagre amount at disposal and you can either invest in a fixer-upper or an off plan property, then investing in a fixer-upper will be a bad choice as later on, you may not be left with much that you can use to refurbish the property and sell it ahead at profit. Investing in a reliable off plan development is a better decision. Buying a property is not an easy choice but not buying a property is also not right. Buying the right property that will meet your financial goals and matches your strategy is a perfect thing. Moreover, think about your buying power and for how long, you can afford to hold on to that investment. Do not be unrealistic about the time you can hold on to your investment before selling it and moving to a new plan.

Working with a wrong team

Hiring the wrong team to get a winning deal is nothing but a disaster. Not every real estate agency understands off plan properties in UK and not every agent knows the dynamics of off plan developments. Instead of roaming around and falling prey to a rookie, conduct your research, ask for references, check the track record and most importantly, do not fall for “Trust me, I will take care of it for you”. Even though they return you every call initially, do not work with the wrong team and invest in a property that is available on discount. Copperstones Properties have an extensive portfolio of off plan properties in UK and several key destinations around the world. Get in touch with us and discuss your investment plans and our experts will curate a customized investment plan for you.

Ignoring the numbers…

Real estate has created more millionaires than any other asset class but not everyone becomes a millionaire as some uninformed investors lose money. Numbers never lie but an investor knows how to deal with numbers. Inexperienced investors either underestimate or miss some of the costs post-purchase costs and become overly optimistic about numbers. When it comes to investing, gut feeling matters but data is what should influence your decision. Let data predict trends for you and help you understand how are you going to recover and make a profit from the project. Make a cash flow and see how this investment will help you generate income. If numbers are not in your favour then you should not invest in this project.

Emotional buying decision…

I love this neighbourhood so I will buy an off plan property here – and it will have potential. Are you an emotional buyer? If yes, then this must be your line before buying an off plan property in London or anywhere in UK because you get easily attracted to colourful brochures, catchy lines, and dream homes planned to be there. It is easy to get carried away by these catchy lines but this may not go to bring the best return. If you are still not sure, this is emotional buying, which can leave you in financial trouble. Before committing, do not forget to run a background check of the developer, see his track record and what he has already delivered. Moreover, what does the neighbourhood look like, and things like proximity to local amenities and size of the property must also be considered? It is important to buy with logic and not with emotions.