Hamptons’ annual off-plan sales index, which combines new homes data from Connells Group with Land Registry completion figures for England and Wales, shows a continued decline in the proportion of new homes sold before completion.

The data indicates that off-plan sales accounted for 33% of new home sales in 2025, down from 36% in 2024. This marks the lowest share recorded since 2013.

The index shows off-plan activity peaked in 2016, when 49% of new homes were sold before completion. That period coincided with strong investor demand, particularly from the buy-to-let sector, which has historically been a key driver of early-stage sales for housebuilders.

The introduction of the additional dwelling stamp duty surcharge in 2016, and subsequent increases to the rate, has contributed to a sustained reduction in investor participation in off-plan markets, with the effect most pronounced in southern England.

Between 2016 and 2025, the largest declines in off-plan sales were recorded in London (-21%), the South West England (-21%) and the South East England (-20%).

The latest decline also follows the increase in the additional dwelling surcharge from 3% to 5% at the end of 2024, which further reduced demand from investors, particularly across southern regions where off-plan purchases have historically been more concentrated.

Flats remain the most likely property type to be sold off-plan, reflecting their continued appeal to investors and some first-time buyers, who are generally less constrained by chains and can commit earlier in the build process.

In 2025, 55% of flats in England and Wales were sold before construction was completed. The highest proportion was recorded in the North West England, where 69% of flats were sold off-plan, supported by sustained investor demand. This exceeded all other regions, including London, where 65% of flats sold in 2025 were agreed before completion.

At a local authority level, Oldham recorded the highest share, with 94% of new flats sold off-plan last year. Wolverhampton (86%) and Salford (81%) also saw particularly high proportions of off-plan flat sales.

By contrast, off-plan activity in the house segment was lower across all property types. In 2025, 40% of terraced homes were sold off-plan, compared with 29% of semi-detached houses and 21% of detached homes. Regional variation was also evident, with Yorkshire and the Humber recording the highest share of houses sold off-plan at 29%, while London recorded the lowest at 15%.

Although off-plan sales declined across all property types compared with both 2024 and 2016, flats saw the most pronounced reduction. This has been compounded by changes in housing delivery, with fewer flats being built over time.

Housebuilders have progressively shifted away from apartment-led schemes. Flats accounted for 54% of new homes sold in 2007, falling to 38% by 2016 and 22% in 2025. As a result, their contribution to overall off-plan activity has also reduced. In 2025, flats accounted for 38% of all off-plan sales, down from 55% in 2016. The last year in which flats made up at least half of off-plan transactions was 2017.

The decline in off-plan sales since 2016 has increased financing pressures for developers, as a greater proportion of homes are now sold after completion, extending the period over which development finance is required.

Based on the data, housebuilders in England and Wales incurred an estimated £264.5m in additional financing costs in 2025 compared with ten years earlier. This equates to around £3,125 per new home sold last year, up from £2,934 in 2024.

Roughly half of this increase is attributed to higher interest rates, adding an estimated £1,800 per unit in 2025. Development finance costs remain significantly above standard mortgage rates, amplifying the impact on margins, particularly on slower-moving developments.

The end of the Help to Buy Equity Loan scheme in 2023 has also affected sales timing. With fewer equity-supported buyers at the point of completion, developers are typically taking longer to sell completed stock, adding further pressure to cashflow and overall financing requirements.

David Fell, lead analyst at Hamptons, said: “The share of new homes sold off-plan continued to slide last year.  Over the past decade, the share of new homes sold before construction is complete has fallen by around a third.  This partly reflects the loss of buy-to-let investors from the market, who have traditionally been the largest buyers of off-plan homes.  However, the shift away from building flats towards houses, which are more likely to be sold after they’re finished and ready to move into, has increasingly contributed to the downward trend.

“This move towards lower-density, house-led development is likely to make it harder for the government to significantly ramp up housing delivery.  Housebuilders are increasingly focused on protecting margins, which has favoured faster-selling suburban schemes.  By contrast, profits on slower-selling, high-density sites have been eroded, or in some cases, wiped out entirely by rising finance costs.

“In a higher inflation, higher interest rate world, off-plan sales have rarely been more valuable.  The cash they generate allows housebuilders to pay down expensive development finance earlier and help offset the substantial upfront costs of materials and labour.  Many of the materials needed to build new homes are highly energy-intensive, meaning their costs have risen far faster than wider inflation.”