Off plan purchase screwed up by me

Crackingbones

My situation is that I am looking to buy an investment property, off plan 1 bed flat in London on a town that will get crossrail.
Prices have been increasing a lot. The area have a strong rental market and demand will only increase once crossrail starts in a few years. The investment flat I was looking at would be ready in q2 2018 it is a 1 bed but at £330k is about 10% more expensive than other one bed room flats in the area, this was because it was a luxury flat. I was all set to buy until they told me that flat was non assignable so I couldn't sell it to someone else until I'd have completed. My worry with this is that if I couldn't raise the money then I'd be stuffed as I couldn't sell it to a third party. But my other worry is that house prices fall down a cliff in the next 2 years. How realistic is that? With crossrail coming I think the prices will have some resilience but it not having the option to reassign the flat is a big worry. All of plan developments nearby have sold out within hours which either means it's a great investment or we are in the middle of a bubble.

csgohan4

it's crystal ball time, only time will tell

glasgowdan

I don't understand, you want to buy it and sell before you've completed the purchase?

seashore22

Surely it was clear to you that you can't "sell" something that you don't own? The flat isn't yours until completion.

Do you mean that you can't pull out without some financial penalty? I would expect that to be the norm too.

Or am I missing something about off plan house buying?

getmore4less

Unless there is a time on how long you have to own it before you can sell it you could complete and sell/complete the same day.

moneyistooshorttomention

glasgowdan wrote: »

I don't understand, you want to buy it and sell before you've completed the purchase?

Well that's a sight more polite than the post I would like to put.

"Get rich quick" schemes often tend to lead to the person concerned owing other people money for the rest of those other peoples lives.

getmore4less

glasgowdan wrote: »

I don't understand, you want to buy it and sell before you've completed the purchase?

the is was(is) fairly common during boom times, you never have to own the place you just sell your right to buy the place as the prices have gone up you take a cut when the buyer completes.

eddddy

For people who aren't familiar with reassignment, here's a few examples:

An opportunity to reassign this one bedroom apartment...

Link: http://www.rightmove.co.uk/property-for-sale/property-45774829.html

...this two bedroom two bathroom flat is offered for sale under contract reassign from the current purchaser.

Link: http://www.rightmove.co.uk/property-for-sale/property-33032970.html

This property is an off-plan, assigned contract purchase.

Link: http://www.rightmove.co.uk/property-for-sale/property-33942126.html

@Crackingbones- as you've identified, it's a high-risk investment. It's up to you whether you want to take the risk, and can afford to lose some of your money if prices drop.

In any case, even if you could reassign the contract, you would have to do it at a loss if property prices have dropped.

Doozergirl

If you're worried about prices falling, then why buy something that you know is overpriced? All apartments are advertised as 'luxury'.

The demand for these things always comes before the rail link arrives. People's anticipation of prices rising causes the rise itself.

everyday7

Hi it's me crackingbones some error with the username.


Most developers allow you to reassign, so I can buy a off plan property, pay the deposit and if something happens and I don't want to complete I can reassign I.e sell the property to someone else. It's fairly common. I am not looking to do this but it's a good option to have if for some reason like job loss If I am unable to get a mortgage to buy. I am starting to think the risk outweighs the benefits but maybe if I had the balls I could make a killing.

steampowered

Not being able to re-assign is fine, assuming you are happy to wait until the flat is completed before selling it. You could always sell it as a new-build if you wanted.

The risk would be if you can't afford to complete for any reason. In that scenario you may lose your deposit and be liable for any drop between the price you agreed to pay and the price the developer actually gets.

How are you financing this? Most mortgage offers are only valid for 6 months, so the risk would be if lending criteria tighten up between now and completion.

In the very unlikely event of a property crash, re-assignability might not help you much anyway. During the financial crash people had to re-sell their off-plan contracts at an enormous discount because there were very few buyers but a lot of sellers who had needed to sell their contracts.