New build homes can be a great investment option, whether you’re a first time buyer trying to get on the property ladder or looking to invest in a property “off plan” before the development has been completed to secure a good deal. New builds are lucrative to many, as they require minimal work, come as a ready and completed new package, and can be customised to bespoke specifications when it comes to fixtures and fittings.

However, there are downsides, and here are 5 of our suggestions of things to take into consideration when deciding on purchasing or investing in a new build property.

1. Do Your Homework On The Developer

When considering a new build property, never rely on the glossy promotional marketing material that they give you or take it at face value by looking at their show room or salesperson. Be sure you have a look at some of the developers other finished sites, read up about the developer and their critics, take time to visit previous projects this developer has completed and if possible, speak to some of the residents about their experiences. Our advice: Dig as much as possible, as you are about to invest your very hard earned money and you want to be re-assured as much as possible.

Are the developers previous new build projects of a decent quality? Is there an issue with the cladding? Has the developer had AWS1 form signed off on the cladding? Do the residents like it? Are the walls too thin between houses/apartments?

Make sure you read up on the developer online as well. Are they mentioned in any forums and in a positive light? Or are there lots of complaints about them (detailed complaints about the property design and service)?

2. Scope Out The Area

Spend time getting a feel for the area and visit the site. Important things to focus on are the transport links, amenities in the area and also that there aren’t too many other new builds coming up in the area. If there are a glut of new builds in the area, will this look like ghetto in 10 years time?

What are the outside spaces like around the building? What does the communal space look like with the lift and stairs? Is the development on a main road / transport line / scrap yard?

Again, our advice: Dig as much as possible, as you are about to invest your very hard earned money and you want to be re-assured as much as possible.

3. Pricing

Did you know that a new build house will depreciate in price the minute you own it? Very much like buying a new car and driving it out of the showroom.

This is why it is so important to negotiate with the developers on the price or on other incentives, such as covering legal fees or stamp duty and furniture packages.

Before agreeing to go ahead, you need to do some research on other similar properties in the area as well as the resale market, so that you can understand the full extent of the premium you may potentially be paying. Developers squeeze every last penny for them when pricing, leaving very little capital value for the buyer.

Just recently it has transpired that Britain’s largest banks are refusing to provide low-deposit mortgages to buyers of new-build properties, due to concerns about inflated prices. This is an very important factor to consider if you are buying it for investment purposes, as there is no doubt, you will stumble across this issue when trying to get a mortgage approved.

4. Adding Value

When you consider investing in a new build, think about whether there is scope to add value to it in the future. For example, would you be able to add a conservatory, bedroom, bathroom or wc, extension or loft conversion? These additions will make it an attractive proposition to future buyers and help you in improving the re-sale value.

5. Leasehold vs Freehold

Whether your new build home is freehold or leasehold is an important factor. Leasehold means that you have a lease from the freeholder to use the home for a number of years. The leases for new build are usually often 90 years or 125 years and share of freehold and long leaseholds tend to be as high as 999 years.

5+1. Service Charges & Hidden Costs
“Many of the charges listed beggar belief,” was the comment of a leasehold owner in an article in the Guardian … be sure to check on the amenities in the development, because if you buy the apartment, you also buy the amenities and pay for them every year. Swimming pool, bicycle storage, garden landscaping, electric gated door, parking, communal areas with carpet or floors and heating, lift, stairs, communal windows, walls, doors, ceilings and roof top maintenance and the list goes on.

The one thing that is certain is that the leasehold costs and service charges will increase year on year, so take it into consideration when calculating the numbers ahead of making this purchase.

Help?
If you are looking to buy an investment property, we would be delighted to assist and help you with any of the questions above or withy our own concerns and thoughts. Call direct on + 44 (0) 207 993 4081 or simply send an email for a fast response.