Assignment six months before handover: the strategy that works when liquidity falls

One of the working scenarios on a cooling market is buying an assignment at a high stage of completion. Here is the mechanics.

How it works

The scheme has two steps. First, buying the contractual rights from the original owner around six months before handover, at a premium to their purchase price. Second, putting the property into long letting immediately after the snagging inspection. In the case examined, the net yield came out at 7.5% — noticeably above the market average.

Why it works

• Developer risk is largely removed. The building is 80–90% complete, and the probability that the project is not delivered is minimal.
• The time to income is short. The money starts working in months rather than years.
• The seller is motivated. It is exactly before the final payment that people exit when they have no source for it. That is the most common reason for an assignment.
• The price is better known. By this point the project has registered transactions, and there is something to compare against.

What to check

• How much has already been paid and what balance passes to you. "The transaction price" and the total cost are different sums.
• Whether the developer permits assignment at this stage: some companies close the window three months before handover.
• The assignment fee — usually a fixed percentage, and most often paid by the buyer.
• The state of construction in person, not from a report.
• Rents in neighbouring buildings — the yield is calculated from those, not from a forecast.

The caveat about the premium

The buyer pays the original owner a premium over their entry price, and that premium is the price of the risk already taken out. If the premium is large enough to bring the entry price level with completed stock in the same district, the strategy loses its point: you are paying for a finished building and still waiting for it.