Is buying a new build property a good investment?

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Investment News
18 Dec 2020
3 min read
Blog
Investment News

Is buying a new build property a good investment?

18 Dec 2020
3 min read
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What are the benefits of buying a new build property?

Investing in a new build property is a good investment for buyers who do not want to take on additional work once the keys are handed over.

 As the property is new, the modern specification, fixtures, and fittings will appeal to tenants and the property will have the added benefit of a new build warranty. Investors should also remember that because everything in the property is new, there should be no need for repairs, general wear and tear, or more expensive upgrades that are often required in older properties.

Also, for buyers who want to complete their purchase before the March 31st 2021 Stamp Duty holiday deadline, new build properties offer a chain-free purchase.

Before you buy, it is a good idea to establish if there are any hidden costs of buying a new build home. Here are Town Square Invest’s top questions for buyers to ask when considering an investment.

Questions to ask when buying a new build house

If you are buying a new build house or apartment, there are some important considerations before you purchase. To help ensure you have the right information upfront, here is a checklist of questions to ask.

 Is there a warranty in place?

One of the advantages of buying a new build property is that there is typically a warranty in place for a predetermined time. Investors should investigate what the warranty covers and what it doesn’t cover to ensure there are no hidden surprises along the way.

How long is the leasehold?

If you are buying an apartment, it is common that a buyer will purchase the property on a leasehold basis. Your solicitor must identify the length of the leasehold in place – ideally, it will be 100 years or more.

Anything below 100 years will require further investigation. For example, how much will it cost you to extend the leasehold?

How long would it take to extend? Also, is the property worth the listed price if you have to pay an additional cost to extend the lease? Your solicitor will be able to assist you and inform you of the process in place, as it will vary from property to property. 

 Ensure the building is up to the latest fire safety standards

The UK has introduced new fire safety regulations to help safeguard people living in apartment blocks. As a buyer, you need to establish that the property you are buying meets the latest safety standards, and if it does not, what is required to improve the property. Your solicitor will be able to assist you in this process, but you must understand any additional costs that could be included in the running cost of your property.

Who is the developer?

It is worth taking the time to research the developer who completed the property. Look at their previous homes delivered and if any issues have been raised on the quality of the build.

How much is the Ground Rent and Management Fees?

If you are buying an apartment within a managed development, establish upfront what the cost of the Ground Rent will be per year and find out if there is a limit on how much it can climb over the next 5-10 years.

At the same time, research the Management Company and find out how much they plan to charge to manage your property. Knowing this information before your purchase will help to safeguard surprise outgoings.

If you are considering whether buying a new build property a good investment for your portfolio, contact the experts at Town Square Invest who will be happy to discuss your options.