An annual survey of off-plan sales suggests they have fallen to their lowest proportion of all new home sales since 2013.
The study is by lettings agency Hamptons which says the share of new homes sold off-plan fell from 36% in 2024 to 33% in 2025, reaching the lowest proportion since 2013.
The share of new homes sold off-plan peaked in 2016, when 49% of sales were secured before a property was built.
That year also marked the introduction of the second home stamp duty surcharge – a policy change that has reduced buy-to-let investor demand, particularly in southern markets.
Because buy-to-let investors have traditionally dominated off-plan purchases, their retreat from the market has had a disproportionate impact on housebuilders’ early sales.
Between 2016 and 2025, London (-21%), the South West (-21%) and the South East (-20%) recorded the sharpest percentage point fall in off-plan sales.
These declines have been exacerbated by the increase in the second home stamp duty surcharge from 3% to 5% at the end of 2024, which further dampened demand from southern investors in particular.
Flats continue to be more likely than any other type of new home to be sold off-plan, reflecting their popularity with investors and first-time buyers, who are less constrained by timescales and housing chains.
In 2025, 55% of flats in England & Wales were sold before construction was completed.
The highest shares were recorded in the North West, where 69% of flats were sold off-plan, driven by strong and sustained investor appetite.
This was a higher share than any other region, including London, where 65% of flats were sold off-plan last year.
At a local level, 94% of new flats sold in Oldham last year were bought before completion, the highest share of any local authority in England & Wales.
Wolverhampton (86%) and Salford (81%) also recorded particularly high levels of off-plan flat sales.
By contrast, off-plan house sales were less common.
Last year, 40% of terraced homes, 29% of semis and just 21% of detached houses were sold before being built.
Yorkshire & the Humber recorded the highest share of houses sold off-plan (29%), while London was the only region where fewer than one in five houses were sold off-plan (15%).
Although the share of off-plan sales declined across all property types in 2025 compared to both 2024 and 2016, flats recorded by far the largest fall.
At the same time, there has been a marked change in the mix of homes being built, further reducing the overall share of new homes sold off-plan.
In recent years, housebuilders have increasingly scaled back flat development, despite flats being more likely than houses to sell off-plan.
Flats accounted for a record 54% of new homes sold back in 2007, a share which had fallen to 38% by 2016 and to just 22% by 2025.
As a result, flats now make up a much smaller share of off-plan sales.
In 2025, just 38% of new homes sold before completion were flats, down from 55% in 2016. 2017 was the last year in which flats accounted for at least half of all off-plan sales.
The 16-percentage point fall in off-plan sales since their 2016 peak has materially increased financing costs for housebuilders. With a greater share of homes now sold after completion, developers are typically carrying development finance for much longer than they did a decade ago.
Fewer off-plan sales, combined with higher interest rates, meant housebuilders in England & Wales incurred an estimated £264.5m in additional financing costs in 2025 compared with 10 years ago.
That equates to £3,125 per new home sold last year, up from £2,934 in 2024. This weighs on margins, particularly on slower-selling sites.
Around half of this increase reflects higher interest rates, adding approximately £1,800 per home in 2025. With development finance typically priced well above standard mortgage rates, these costs have become increasingly significant.
This article is taken from Landlord Today