Off-plan property purchases bring a unique set of circumstances and considerations for Conveyancers. When clients are buying a property that is not yet built, the job of the conveyancer is even more vital to protecting clients’ interests. And with the continued demand for new housing ever-increasing, we can expect the number of these types of transaction to remain steady, if not increase.
Pulled together by Prosperity Law’s expert Conveyancing team, here are a few key considerations for Conveyancers working on an off-plan property transaction.
Planning permissions and agreements
Some off-plan properties are offered for sale before the correct planning permissions are in place, or before the housebuilder has even purchased the land. Therefore, it is vital that you make sure the correct planning permissions and agreements are in place at the earliest opportunity. Should there be any issues with planning or land-purchase after your client has paid a sum of money, it puts those funds that have been handed over in jeopardy should the build of the house fall through. In regard to planning, Conveyancers should also ensure that planning conditions which require to be discharged before completion, have indeed done so.
The other important point for conveyancers is to thoroughly check the title deeds of the property to ensure there are no restrictive covenants, and if there are, highlight these to your client.
Timescales and phasing
Conveyancers should always ensure there is a longstop date stated in the contract, by which the developer must have the property completed by. This gives your client security and sets expectations for a smoother sale. You should also check the phasing of the development and what phase your client’s build is part of, as they could be living on a building site whilst later phases are constructed. This, of course, may be suitable for your client – but they should at least be aware before contractually agreeing to the property purchase.
Speaking of the site itself, you should also check the rights of way to ensure that the site can be legally accessed by the purchaser.
Completion
It’s always useful to note that the deadline for exchange could be earlier than the completion date. In such cases, you should ensure your client has a mortgage offer in place or at least understands that if, for any reason, they can’t get a mortgage by completion they could lose their deposit.
It is also good practice, in cases where a client is using an Investor Lender, to recommend your client has a mortgage offer in place in plenty of time. Such lenders may use their own solicitors who raise numerous enquiries which can be time consuming. If these queries take weeks to satisfy, having plenty of time in advance of completion ensures there’s no delay in funds being released.
You should also make sure that on completion your client is issued with a build warranty, a completion certificate, and any other relevant documentation such as fire assessment documents and EWS1 pertaining to leasehold flats over 18metres.
Notes for investors buying off plan property
If you’re an investor looking to make an off-plan property purchase, there are a few points to take into account during the decision-making process.
- Protecting your deposit: If the buyer withdraws from the sale in between exchange and completion there is a chance they will lose their deposit. Something to consider when crafting the sale and purchase agreement.
- If you live overseas, the stamp duty due will be higher as subject to the sur charge (which stands at 2% currently*). You will also be required to instruct a process agent to deal with any notices on your behalf. There is usually a fee associated with such an agent.
- Staged payments may be required.
- If you are purchasing as part of a company, you will be required to sign security documents as well as personal guarantor documents. You will also be required to seek independent legal advice from another solicitor.
If you’re seeking representation for an off-plan property purchase, get in touch with our expert team now for a confidential consultation, email Angela Clegg or call 0151 909 1847.
*accurate as of 28th April 2023.
