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What are the pros and cons of buying off-plan?

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My partner and I are trying to buy our first home together. The market is red hot and we are facing fierce competition for properties in our area.

In the past six months we have lost out on one property after we were outbid, and on another one after the seller’s onward purchase collapsed.

With property prices rising, we are starting to worry that we will never get on the property ladder if we leave it much longer.

We recently came across a new development being advertised online which looks perfect – and is within our budget. The big problem is that it’s still being built, and it won’t be completed for more than a year.

We are prepared to continue renting until it finishes, but we would like to know whether buying off-plan is a good idea, and whether there are any potential issues we should be aware of.

Instead of a viewing, off-plan buyers will sit down with an agent or developer and look at plans, CGIs, a specification list and a development model to decide whether a home is for them

Instead of a viewing, off-plan buyers will sit down with an agent or developer and look at plans, CGIs, a specification list and a development model to decide whether a home is for them

Ed Magnus of This is Money replies: The UK property market is in the middle of a boom, which means competition is rife.

Read the news headlines and you’ll see ‘soaring house prices’, ‘bidding wars’, ‘property frenzy’, and ‘race for space,’ – it’s enough to make any aspiring homeowner panic that they’re being left behind.

There are more than 700,000 homes currently going through the conveyancing process, according to Rightmove – the biggest sales pipeline in a decade.

On average it is taking four months for a property to go from being under offer to sold, thanks in part to a ‘conveyancing logjam.’

As you have unfortunately discovered, many transactions are being delayed or thwarted by the fact there is a long chain of buyers and sellers all relying on one another to complete on their own purchase.

If any transaction in the chain collapses, everyone is impacted.

Most new builds come with a 10-year warranty that guarantees against structural defects

Most new builds come with a 10-year warranty that guarantees against structural defects

For first-time buyers, one way to avoid the insecurity and anxiety that comes from being stuck in a chain is to buy a new-build property.

But those searching for brand-new homes will find that many of the online property portals are advertising homes that are not even built yet.

The prospect of a blank canvas can be tantalising, which is why some buyers will consider a property that is yet to be completed – and in some cases before construction has even begun.

This is known as buying off-plan, because often buyers will choose their home based on looking at architect’s plans rather than the real thing. 

To explain the pros and cons, we spoke to Rob Bence, founder and chief executive of the forum Property Hub; Paula Higgins, founder and chief executive of the HomeOwners Alliance;  Jonathan Enticknap, director of London residential development at estate agent Hamptons; and David Jubb, director at JLL Residential.

Should a first-time buyer consider buying off-plan?

Jonathan Enticknap replies: For first time buyers who have some flexibility on when they can complete on a purchase, buying off-plan can be a fantastic opportunity. 

This is because of the potential for capital growth – i.e the home increasing in value – throughout the build process.

There is a preconception that buying off-plan is only for the wealthy, or international investors. 

But if the right property, in the right location, at the right price becomes available, why wouldn’t you consider it?

One advantage of buying off-plan is that you might be able to personalise some aspects of your home - but the major drawback is you don't have control over when it will be ready

One advantage of buying off-plan is that you might be able to personalise some aspects of your home – but the major drawback is you don’t have control over when it will be ready 

Rob Bence replies: Most new-build developers now start the sales process before the foundations go in, and it’s not uncommon for first time buyers to opt for a new build property that’s off-plan. 

As with any project though, sometimes timescales can slip. So if you’re a first-time buyer in a hurry to move, it’s worth considering what your options would be, were the build to get delayed for one reason or another.

What are the major risks?

Paula Higgins replies: You can’t be sure what the finished property will look like, so there will always be an element of risk.

If the site is being completed in stages you may find in the short-term you could be living on a building site with no neighbours, lots of noise and dust.

Also, if the build is delayed, you could have to re-apply for your mortgage as most mortgage offers only last for six months.

Rob Bence replies: The developer could go bust before the building is finished and that could mean your deposit is at risk if it is not protected.  

The other major risk is that the property market could also fall during the construction period, meaning you could end up with a lower valuation at completion than the price you agreed and paid a deposit on at the outset.

You could also run into mortgage issues, which might result in you being unable to complete and therefore, forfeiting the deposit you paid when you exchanged contracts.

What are the biggest advantages?

Paula Higgins replies: It might be possible to personalise your home by having a say on the internal layout, fixtures and fittings, as well as where is sits within the development.

Your home will also come with a new-build warranty which can give you greater peace of mind than if you were purchasing an older property.

Once the property is built, the warranty is split into two periods: the defects insurance period, which covers the first two years, and the structural insurance period which covers years three to 10.

Typically, during your first two years in the home, if there are issues with the work the builder has done, such as the heating not working because the pipes are faulty, the developer is obliged to come and fix them.

During the structural insurance period, the developer is typically only responsible for major problems with the structure of the property.

Rob Bence replies: First and foremost, there is no chain, so you won’t need to worry about having your purchase scuppered by somebody else’s transaction falling through.

You can also often negotiate discounts off the purchase price, and negotiate on extra upgrades like flooring, appliances and kitchens.

And once your offer is accepted, you get to lock in at the agreed price.

This means if you purchase a property that’s 12 months off-plan in a rising market and prices go up five per cent, you’ve made a gain without lifting a finger – and with only having put a small deposit down. 

How does an off-plan purchase work?

Rob Bence replies: The process is not too dissimilar to buying a completed property, barring the fact that you can’t physically view it before making your offer.

You’ll be required to pay a reservation fee to secure the property, which is often deducted from the deposit you’ll pay later in the process.

As an off-plan buyer, you will often get to choose some of the materials used in your home

As an off-plan buyer, you will often get to choose some of the materials used in your home

You’ll then instruct a solicitor to go through the usual conveyancing process which includes searches and the checking of contracts.

Once your solicitor is happy, they’ll usually ask you to pay the deposit and exchange contracts. Once the contracts are exchanged, you’re legally committed to purchasing the property.

If the purchase doesn’t go through after this, you’ll lose your deposit – so that’s something to bear in mind.

As the build progresses, you’ll need to arrange your mortgage towards the end of construction, so you have everything ready in time for completion of the property, unless of course you’re a cash buyer.

Once the build is finished, the developer will serve a ‘notice to complete’ which will give you a certain amount of time to complete the purchase – either paying the remainder of the cash or finalising the mortgage.

How can buyers make sure their money is safe?

Jonathan Enticknap replies: If you are buying a property more than 12 months from completion, look for a developer with a strong reputation and track record.

Speak to a mortgage advisor to understand what you can afford before reserving, and do not forget to apply for your mortgage offer six months prior to completion.

Also, don’t forget to factor in stamp duty to any financial calculations you make.

Rob Bence replies: Make sure your deposit is protected ‘in escrow’ or by warranty in case the developer goes bust – your solicitor can review the documentation if you’re not sure.

Warranty providers rarely guarantee a deposit above 10 per cent, so putting down more than this puts you at risk if the developer goes bust.

Research the developer: If they go bust during construction, you could lose your deposit

Research the developer: If they go bust during construction, you could lose your deposit

It’s not uncommon to see developers asking buyers to pay their deposits in stages,  eventually totalling more than 50 per cent of the purchase price. 

Here, the developer is effectively using your money to fund the build, which puts you at significant risk if the scheme is never completed.  

Finally, factor in the potential for delays – if you’re in a rush to move into your new home, you may need a back-up plan.

Paula Higgins replies: It’s so important to do your research and make sure you are going with a quality developer – new build homes are not all the same, so look up previous projects built by the developer. 

If it is a leasehold property, make sure you go through the lease with your conveyancer as soon as possible, paying particular attention to the length of the lease, ground rents and service charges as well as any restrictions.

Finally, at the point of completion, make sure you have a snagging survey done. This will identify defects or problems which need fixing before you move in.

The survey should spot minor issues, from a door that’s misaligned and catching on the carpet, to something more serious that could affect the structure of your home.

What about if purchasing Help to Buy?

David Jubb replies: With Help to Buy you benefit from an interest free equity loan for the first five years but from the start of the sixth year there is an interest charge of 1.75 per annum on your loan, which you will need to pay per month unless you repay.

For those using Help to Buy, you’re allowed to exchange a maximum of nine-months before completion, so if you’re keen on a particular development or purchase, I’d advise trying to buy as close to that limit as possible.

Also, when buying in advance of the building being completed, many developers are now offering incentives with Help to Buy, such as stamp duty paid, so ensure you ask these questions before reserving to ensure you make your purchase more affordable. 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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Oscar-winning La La Land star Emma Stone places three-bedroom Malibu home up for sale for $4.2M

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Oscar-winning La La Land star Emma Stone places three-bedroom Malibu home up for sale for $4.2 million

  • Stone, 33, purchased the oceanfront property for $3.25 in 2018
  • The home spans more than 1,700 sq. feet over 3.2 acres of property in the luxe Southern California area 
  • The home includes exquisite views of the Los Angeles cityscape, Pacific Ocean and Catalina Island 
  • Stone also owns houses in Los Angeles and Austin, Texas; and an apartment in Manhattan 

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Emma Stone is looking to sell her three-bedroom, two-bathroom home in Malibu, California for $4.2 million.

The 33-year-old actress has listed the mid-century bungalow home on the real estate market, about four years after she purchased the oceanfront property for $3.25 in 2018, The Wall Street Journal reported.

The one-story home belonging to the Oscar-winning La La Land star spans more than 1,700 sq. feet over 3.2 acres of property in the luxe Southern California area.

The latest: Emma Stone, 33, is looking to sell her three-bedroom, two-bathroom home in Malibu, California for $4.2 million. The Academy Award-winning actress was snapped in Athens, Greece earlier this month

The latest: Emma Stone, 33, is looking to sell her three-bedroom, two-bathroom home in Malibu, California for $4.2 million. The Academy Award-winning actress was snapped in Athens, Greece earlier this month 

Sotheby’s International Realty listing agent Eric Lavey, who is the listing agent on the property, described the home to the paper as ‘a classic 1958 California Midcentury hanging over the Pacific’ and ‘the Malibu beach house they would choose for a Nancy Meyers movie.’

The Scottsdale, Arizona-born beauty’s home includes exquisite views of the Los Angeles cityscape, Pacific Ocean and Catalina Island, and is within walking distance of nearby hiking trails and the beach.

The Cruella star’s house, which has been renovated in recent years, has a state-of-the-art kitchen with gold accents.

The living room of the abode is centered around a fireplace encased in a white brick column, as floor-to-ceiling windows in the home allow for sunlight to pour in.

The living room of the abode is centered around a fireplace encased in a white brick column

The living room of the abode is centered around a fireplace encased in a white brick column

The home boasts amazing views of the Pacific Ocean via multiple angles and vantage points

The home boasts amazing views of the Pacific Ocean via multiple angles and vantage points 

The home features a dining area outdoors which is sequestered by eucalyptus and yucca trees

The home features a dining area outdoors which is sequestered by eucalyptus and yucca trees

A dining room in the home sits adjacent to an outdoor patio

A dining room in the home sits adjacent to an outdoor patio 

A bathroom in the home has a standalone bathtub along with a rain shower.

The home features a dining area outdoors which is sequestered by eucalyptus and yucca trees, and a patio with a panoramic view of the coast.

Other amenities the home features includes a recreation room and art studio.

The Cruella star's house, which has been renovated in recent years, has a state-of-the-art kitchen

The Cruella star’s house, which has been renovated in recent years, has a state-of-the-art kitchen 

The home is made of white brick and wood with gold accents and state-of-the-art appliances

The home is made of white brick and wood with gold accents and state-of-the-art appliances 

A dine-in area sits adjacent to the kitchen in the stunning beach home

A dine-in area sits adjacent to the kitchen in the stunning beach home 

In the years since she acquired the home, Stone in 2020 wed writer Dave McCary, 36, and the couple welcomed a baby daughter in March of 2021.

According to the paper, Stone also owns houses in Los Angeles and Austin, Texas; and an apartment in Manhattan.

Lavey told the paper that he expected the house to sell quickly, as there is a scarcity of homes in that price range in Malibu, and residents of other well-heeled Los Angeles locales such as Beverly Hills or Holmby Hills are partial to purchasing smaller beach homes.

A master bedroom in the home outlooks a panoramic view of the Pacific Ocean

A master bedroom in the home outlooks a panoramic view of the Pacific Ocean 

Floor-to-ceiling windows in the home allow for sunlight to pour into the home

Floor-to-ceiling windows in the home allow for sunlight to pour into the home 

A bathroom in the home includes a rain shower and standalone tub

A bathroom in the home includes a rain shower and standalone tub

A shower in the bathroom has a glass door with gold fixtures

A shower in the bathroom has a glass door with gold fixtures 

A brick-lined patio area boasts a stunning view of the Pacific Ocean

A brick-lined patio area boasts a stunning view of the Pacific Ocean 

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More than 9,000 artists apply for universal basic income scheme

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More than 9,000 artists have applied for a new dedicated basic income scheme which will see successful applicants receive €325 a week.

Minister for the Arts Catherine Martin said there had been a “huge level of enthusiasm” for the scheme and described the plans as a “watershed moment” for the sector.

Assessment of the applications has started and the process will take a number of weeks given the high volume received.

The basic income scheme was launched in April when the Government announced the payment would be made available to 2,000 applicants in total.

The Coalition has said the objective of the scheme is to address the earnings instability that can be associated with the intermittent and sometimes project-based nature of work in the arts.

The process for selecting successful applicants will be non-competitive, so once a person satisfies the eligibility criteria they will be included in a randomised selection process to pick the successful 2,000. It is understood unsuccessful but eligible applicants will be invited to participate in a control group to help with an appraisal of the pilot scheme.

A basic income for artists was the main recommendation of the Arts and Culture Recovery Taskforce set up in 2020 to examine how the sector could adapt and recover from the crisis caused by the Covid-19 pandemic.

The scheme opened for applications on April 12th and closed on Thursday, May 12th.

The Department of Arts said the highest number of applications came from those in the visual arts sector, followed by those involved in music, then film and then literature.

‘Watershed moment’

Speaking to The Irish Times, Ms Martin said it represented “a watershed moment in the funding of artistic practice in Ireland”.

“The new measure makes a statement about our values as a nation – that the voices of artists have been heard and that the arts matter. This is a unique opportunity to research the impact a basic income could have on the arts and to provide the evidence base for a permanent support.

“I am very pleased with the huge level of enthusiasm for the basic income for the arts pilot scheme and am delighted that over 9,000 artists and creative arts workers were willing to participate in this innovate research project.”

Mr Martin said the scheme “heralds a new approach to the way the State funds and recognises her artists and I look forward to seeing the data and findings of the research during the pilot”.

There had been significant interest in the new scheme for artists from other countries, media and practitioners, which indicated the enthusiasm in the arts globally for the move, the Minister added.

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Neinver begins construction of Alpes The Style Outlets (FR)

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NEINVER has resumed construction works at Alpes The Style Outlets, which once completed will mark the company’s 17th outlet centre across 6 European countries. The company broke ground last March and works are advancing on schedule, with the development of three platforms that will house the main building and car park all well underway. Alpes The Style Outlets, which will be NEINVER’s second outlet centre in France, boasts an exceptional location near the Swiss border, close to Geneva and next to key tourist destinations. It will feature 20,400m² of GLA, over 90 boutiques and restaurants providing both local and international cuisine.

 

“France is a strategic market for NEINVER. Our aim is to develop and operate this centre with the local community firmly involved, providing it with an exciting leisure option, while also contributing to improving the region’s economic and social development,” commented Daniel Losantos, NEINVER Chief Executive Officer. “Outlet centres have shown continued resilience, and this development is a clear vote of confidence in the sector and in the opportunity the site offers to brands to further grow their business.”

 

Located 25 minutes from Geneva, the scheme will offer 1,350 parking spaces and will have direct access to the A-40 motorway, a key transport link between France and Switzerland and to popular winter destinations. It will also be easily accessible by high-speed train thanks to the Paris to Geneva connection, with a TGV station located just 5 minutes from the future centre.

 

“We are seeing keen interest from our brand partners in this one-of-a-kind project due to its exciting retail proposition and its unique location, with great brands such as Adidas, Guess and Levi’s already joining the scheme”, said Joan Rouras, NEINVER Leasing and Retail Director. The centre is exceptionally well located in the Grand Genève area, which enjoys a strong purchasing power and high levels of tourism. The region has also seen a spike in population growth in recent years and is expected to continue increasing significantly in the coming years. To attract these customers, we are designing a destination that will feature an exclusive retail mix of sought-after international brands and the best of what the local area has to offer – a compelling offer for any fashion lover or avid sports fan.”

 

Finely tuned to the local landscape, Alpes The Style Outlets will offer an avant-garde atmosphere, combining natural materials such as wood and stone for a contemporary look. In this open mall concept designed in an “Alpine village” style with chalet-style shops and terraces, NEINVER plans to create a promenade destination and a relaxing day-out providing much more than just shopping. Lyon-based SEV Architectures will project monitor the construction under the coordination and supervision of Arcadis, leading global design and consultancy.

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