Buy before you try (and save money)

Off-plan sales aren't limited to the Costas. Just be sure to drive a hard bargain and have a firm completion date, says Christopher Browne

Unless you are rich, restless or part of a fast-growing family, you are unlikely to move more than once every 12 years, according to the Government's latest housing figures. But your car is a different matter. Most motoring experts advise you to change it every three years so you can keep down your costs and keep up with the Joneses. But whether you're a Bentley-admirer, Jag-lover or Nissan-appreciator, you wouldn't buy your next model without first visiting the dealer to give it a test-drive.

You might think that houses and flats merit even closer scrutiny. For not only is your home your priciest investment, it's also large and immovable, doesn't need tyre changes or 6,000-mile services and stays with you at least four times longer than the average car. But then property has its own rules - and the latest of these is to buy unseen or, more specifically, off-plan. Not long ago anyone who even dabbled with the idea would have been dismissed as foolish or crazy or both. But today buying a property before it has been built is accepted practice - and positively popular in the Spanish Costas.

"Buying off-plan works very well in Spain and Portugal, as much of it is new development and any fears about not finishing on time are solved by having the completion date written into your contract," says Dave Smith of UK mortgage broker HJP Services, which recently started a Spanish property website. "In the UK we're still not sure a house will turn out the way it has been planned and need to be convinced that the builders have a good track record. The best off-planners are often people in property who know how its works," he says.

One man who knows his off-plans from his onions is Simon Leak, of south-west London-based Executive Mortgages and Brokers. After clinching several deals for his clients recently, Leak and his wife decided to take the plunge and go off-plan themselves. After months of house-hunting, the couple found out about a new development in Teddington, Middlesex. They liked what they saw, so they put down a 10 per cent deposit on a five-bedroom house with an eight-month deadline. Eleven months later the Leaks moved into their new home.

Leak is delighted with the decison to buy the home off-plan: "It's exactly what we wanted in every way. It was the perfect size and overlooked an attractive deer park. The only snag was that it was three months late." His advice is clear and uncompromising. "If you buy unseen, you should drive a hard bargain with the developers - especially as interest rates are likely to rise in the next two months. Developers often depend on those first sales to help fund their project and may give discounts accordingly."

And those discounts can be very generous in Spain or Portugal. Many people managed to clinch a deal 25 per cent "below market", as it is known, because Iberian developers are even keener to sell fast to meet their targets. Smith advises people to sell mid-term too. "Most projects take around 18 months to three years, so you can get a healthy increase in your capital growth - and your buying price doesn't budge an inch," he says.

Off-plan UK-style is better for owner-occupiers than potential landlords, says Leak. "It's especially favourable if you are buying long-term as you'll hardly be affected by market fluctuations. But any British investors should be wary of buying into large blocks of 100-plus flats as they now face rising interest rates as well as difficulties finding tenants."

The answer, says Edward Lewis of FPD Savills, is to put money into university town and city schemes. "Centres like Manchester, Birmingham, Cardiff and Bristol have large swathes of student renters and expanding off-plan projects that appeal to Hong Kong and South African investors who invariably understand how it works."

Savills property group recently sold 44 two-bedroom flats in a scheme at Westminster Green, Horseferry Road, London SW1, at £325,000 apiece. "The spirit flooded back into off-plan in the late summer and it's starting to take off in the UK," he says optimistically.

Lenders are joining in the spirit too, issuing off-plan mortgages when projects are signed, sealed and developed - with a Council of Mortgage Lenders inspection/guarantee that they are snag-free before payout day. Unseen it may be, but buying off-plan appeals to the architect in us. It's also a great way to get a discount.

For more details on buying off-plan, contact Online-Landlord (01322 277129, www.online-landlord.co.uk), HJP Services (01306 742200) or Executive Mortgages and Brokers (020-8891 1133)