Property: Pay now, move in later

With a little vision, you can plan your perfect house by buying it before it is finished.

Buying a property off-plan - in the early days before any construction has started, or more usually some time before the property is completed - is something UK buyers have been doing more and more until recently. And when prices are rising strongly, some purchasers take advantage of the hike in values and sell their property on without ever moving in.

"Over the past two years there have been a few people buying early at all our developments and selling them on before they are completed. At Barnes Village, south-west London, someone apparently made a 20 per cent profit," says Ros Hetreed, marketing manager for Berkeley Homes (Thames Valley). "It's all to do with trusting the developer sufficiently to deliver what it promises".

At Victoria Quay, a development by Linden Homes of 99 houses and flats at Ocean Village in Southampton, Hampshire, several people bought two or three apartments earlier this year. "They have all kept one for themselves and sold on the others to reduce their borrowings," says Philip Davies, chairman of Linden Homes. There are nine townhouses left, selling from pounds 164,950 to pounds 249,950.

Even large detached houses have been bought off-plan in order to sell on. "We had five large houses in Esher, which were around pounds 600,000 each," says Tony Pidgley of Thirlstone Homes. "Three people got together, put down a deposit of 10 per cent and bought the lot just after we had got planning. Just before they were completed they flipped them and made a good healthy profit".

For people who intend to live in the property, advantages of buying off- plan include the chance to pick the best plot, choose the fixtures and fittings and make internal alterations.

Annie and Jack O'Brien bought a house from Bryant Country Homes in June, hoping to be able to move in at the end of September. "It's not the first new house we have bought, but it is the first one we have bought off-plan," says Annie.

The O'Briens saw the development, Lytton Park in Cobham, Surrey when the foundations were going down. "We liked what we saw from the plans, but did a lot of homework before we decided to buy, looking at many other properties. We went for the Bryant house because it gave us what we wanted and, of course, we could choose the colours of the kitchen and bathrooms.

"We waited as long as we could to see what the finish would be like and a week before the show-house opened, signed on the dotted line. You have to have a lot of vision when looking at plots of land and unfinished houses and a lot of people find that difficult," Annie says.

The O'Briens are in rented property with a contract that runs out at the end of September. What happens if the building programme should be delayed? "We have thought of that," says Annie. "We can extend our tenancy for another month, but hope that as the house had its roof on when we bought it, there should not be any problems." Hamptons is selling the remaining 13 five-bedroom properties from pounds 715,000 to pounds 850,000.

Finance is not normally a problem. Lenders are quite au fait with off- plan buying. Once you have put down your 10 per cent deposit they will probably have a look at the site early on and then return a week before completion. Once satisfied, the mortgage will be agreed in time for you to pay the final 90 per cent.

Uncertainty about the completion date is the main worry, especially if you are paying two mortgages while you wait. "You can never be sure that the build programme doesn't slip, although builders add on quite a few months to cover themselves," says Gill Lamprell of Knight Frank. "In most cases, developers are within their original projected dates by two to three months".

Tony Carey, managing director of St. George, says that about 50 per cent of his developments are sold off-plan, the rest before they are completely finished. "From a developer's point of view it's all to do with striking a balance. It is nice to have finance in hand early but not so far ahead that you cannot take advantage of rising prices," he says.

Carey reckons that people like buying early because it helps them to plan their life. "It could take a year to sell a property and it means they can take their time," he says. St. George is selling off-plan apartments at locations all over London.

Both Tony Carey and Paul Vallone of Berkeley Homes stress that communication between developer and customer is the most important thing. "You need to keep them informed as to what is happening," says Vallone. Should completion be delayed, the purchaser has no recourse to compensation. But the contract gives the developer the right to demand that the purchaser completes.

In South Wales, Wilcon Homes has seen a record number of purchasers buying from plans. "Such sales have accounted for more than half the region's developments," says David Swidenbank, area sales manager. "People reserve a property they have not seen in order to get the house type and the plot they want. It also gives them added time. At a development in Undy, near Newport, one buyer was able to complete his purchase before going abroad on business for three months."

Berkeley Homes, 01932 868555; Linden Homes, 01703 366399; Thirlstone Homes, 01932 350900; Hamptons, 01372 468411, St. George, 0181 917 4000; Knight Frank, 0171 824 8171; Wilcon Homes, 0800 0711400