Transfer Off Plan Property Contract UK - Assignment Process and Costs

How to transfer an off-plan property contract before completion

Transferring an off-plan property contract in the UK can allow an investor to move their contractual rights to another buyer before the property is completed. This is often structured as an assignment of rights, although other pre-completion arrangements can also apply.

The process is particularly relevant where an investor's circumstances have changed, the property has increased in value, or they want to exit the purchase without completing the property acquisition themselves.

The first step is to examine the original purchase contract. An assignment is not automatically available simply because the property has not yet been completed.

Can you transfer an off-plan property contract?

Potentially, but the original contract controls the position.

An off-plan purchase agreement may contain provisions dealing specifically with assignment. These can state whether the purchaser can transfer their contractual rights, whether the developer's written consent is required and whether an administration fee is payable.

Before attempting to transfer the contract, check:

• Whether assignment is permitted

• Whether developer consent is required

• Whether there is an assignment fee

• Whether there is a deadline for requesting consent

• Whether the incoming buyer must meet specific requirements

• Whether any deposit or instalments remain outstanding

• Whether the developer has restrictions on marketing or resale

A solicitor or conveyancer should review the contract before an investor commits to an assignment.

What does transferring the contract actually mean?

An assignment is different from selling a completed property.

Suppose an investor signs a contract to buy an off-plan apartment from a developer for £350,000. Before completion, the investor finds another purchaser who agrees to take over their contractual position.

If the contract permits the transaction and the necessary requirements are satisfied, the investor may assign their rights to the new buyer.

The new buyer then becomes the person entitled to complete the acquisition under the applicable contractual structure.

HMRC specifically recognises assignments of rights as a type of pre-completion transaction for SDLT purposes. 

Does the developer have to approve the transfer?

This depends on the purchase agreement.

Many off-plan contracts contain restrictions around assignment because the developer may want control over who ultimately completes the purchase.

The developer may require:

• Formal written consent

• Details of the incoming purchaser

• Evidence of funding

• Completion of compliance checks

• Payment of an administration fee

• Assignment documentation

• Solicitor-to-solicitor communication

If developer consent is required, an investor should obtain it before treating the transfer as agreed.

How much does it cost to transfer an off-plan contract?

There is no universal UK assignment fee.

The total cost can include:

• Developer assignment or administration fee

• Solicitor or conveyancer fees

• Property marketing or agency costs

• Mortgage-related costs

• Tax advice

• Other contractual expenses

The original purchase agreement should be checked carefully because the developer's fee may already be specified.

An investor should calculate these costs before agreeing the transfer price with the incoming purchaser.

Can you make a profit when transferring an off-plan contract?

Potentially, if the contractual position has become more valuable since the original purchase.

For example:

Original contract price: £300,000
Agreed assignment consideration: £335,000
Gross difference: £35,000

However, the £35,000 is not automatically the investor's net profit.

The investor may still have to account for legal fees, developer charges, financing costs, tax and other expenses.

The incoming buyer will also consider whether the overall transaction represents good value compared with buying another property directly from the developer or on the resale market.

SDLT and off-plan contract assignments

Stamp Duty Land Tax can be an important consideration when transferring an off-plan contract.

HMRC's current guidance states that, broadly, where rights under an original property contract are assigned before completion, the consideration for the eventual purchaser can include both what they pay under the original contract and what they pay for the assignment. 

HMRC gives an example involving a £1 million property contract where the original purchaser assigns their rights for £100,000. The eventual purchaser's SDLT consideration is treated as £1.1 million in that example. 

This means the assignment price should not be considered in isolation. The parties should obtain appropriate tax advice before completing the transaction.

What if the developer does not permit assignment?

If the original contract prevents assignment, the investor cannot simply transfer the contract without considering the contractual restrictions.

Depending on the circumstances, alternatives may include:

• Negotiating with the developer

• Checking whether a novation is permitted

• Exploring a subsale structure

• Reviewing the contract for other transfer provisions

• Completing the purchase and selling the property afterwards

• Checking whether a long-stop provision provides an exit

Each structure can have different legal and tax consequences.

Long-stop dates on off-plan contracts

A long-stop date can provide an important contractual protection when buying an off-plan property.

Construction can be delayed for a range of reasons, including planning, building work, funding and infrastructure issues. Some contracts provide a right for the buyer to withdraw if the property has not been completed by a specified long-stop date.

GOV.UK guidance recommends checking the contractual position where a property is still being built and explains that a long-stop date can permit withdrawal following significant delays. 

This is separate from an assignment. The contract should be reviewed to establish exactly when and how either option can be used.

Is it easier to transfer before or after exchange?

The distinction is important.

In England and Wales, an offer is generally not legally binding until contracts are exchanged. Once contracts are exchanged, the parties are legally committed to the transaction. 

If an investor wants to transfer an off-plan contract after exchange, they should therefore rely on the contractual assignment provisions or another legally appropriate structure rather than simply attempting to withdraw.

Practical steps to transfer an off-plan property contract

1. Review the original purchase agreement

Identify the assignment clause, restrictions, consent requirements and relevant deadlines.

2. Confirm the developer's position

Ask whether the developer permits assignment and request details of any fees or documentation required.

3. Establish the financial position

Calculate the original purchase price, deposit paid, outstanding instalments and expected transaction costs.

4. Assess the current property value

Research comparable units and consider the property's current market position before setting an assignment price.

5. Find an appropriate incoming buyer

The buyer should understand that they are taking over a contractual position relating to an uncompleted property.

6. Instruct the appropriate legal professionals

The solicitors or conveyancers should document the assignment and coordinate with the developer where necessary.

7. Review tax implications

The parties should establish the relevant SDLT treatment before completing the transaction.

8. Complete the transfer correctly

All required consents, documents and payments should be completed before the incoming purchaser assumes the relevant contractual position.

What investors should check before buying an assignable off-plan contract

If you are considering an off-plan investment partly because you may transfer the contract later, examine the assignment provisions before committing.

Important points include:

• Developer's assignment policy

• Assignment fees

• Consent requirements

• Deposit structure

• Completion date

• Long-stop date

• Construction timetable

• Mortgage requirements

• Service charges

• Lease terms

• Expected rental demand

• Comparable property prices

• SDLT implications

An assignment clause can provide flexibility, but it does not guarantee that another buyer will be available when you want to exit.

Fraser Bond support with off-plan property transfers

Fraser Bond can support investors and property owners assessing off-plan property transactions and potential exit strategies across London and the wider UK.

Our property consultancy support can include assessing the commercial position, reviewing the practical considerations around resale, coordinating relevant property professionals and helping investors evaluate assignment and other property exit options.

Legal drafting, conveyancing and tax advice should be handled by appropriately qualified solicitors, conveyancers and tax advisers.

Planning the potential exit route before purchasing an off-plan property can help investors understand their contractual obligations and the costs involved if they later decide to transfer their position.