When buying off-plan, the buyer pays a reservation fee to secure the unit, then exchanges contracts and pays a deposit, commonly a percentage of the purchase price. The remaining balance is due only on legal completion, which may be many months or even years later. During that gap, property values, mortgage rates and personal circumstances can all shift materially.
A critical practical issue is mortgage timing: most mortgage offers are valid for a limited period, and if construction overruns, the offer may lapse and need to be reapplied for under whatever market conditions then exist. The independent valuation carried out at completion may also come in below the agreed purchase price, affecting the achievable LTV and therefore the mortgage amount the lender will advance. A thorough snagging inspection before legal completion is strongly advised.
Developer risk is real: if a developer encounters financial difficulty the project may be delayed or, in the worst case, stopped entirely, putting deposits at risk. Some developers place deposits in protected escrow accounts, but this is not universally required by law in England and Wales. Buyers should have a specialist conveyancing solicitor review all contractual protections before committing.
For overseas buyers, currency fluctuation between exchange and completion, the need to requalify for a mortgage if the build overruns, and developer due diligence all carry amplified importance and should each be addressed with independent legal and financial advisers before committing.