The UK new build property market is a popular investment choice for many people, thanks to its potential for high returns and low maintenance costs. However, there are a few things you need to know before you invest in a new build property. This step-by-step guide will help you make the most of a new build property investment.
Do your research.
Before you start investing, it’s essential to do your research and understand the market. This includes looking at the current price trends, rental demand, and potential for capital growth in the area you’re interested in. You should also research different developers to find one with a good reputation and a track record of delivering quality properties on time and on budget.
Consider your investment goals.
What are you hoping to achieve with your investment? Consider how long you intend to keep your investment and whether your priority is capital gains over the period of ownership or monthly rental yield. Once you know your goals, you can start to narrow down your search for properties that meet your needs. It’s also important to ensure you’re aware of landlord tax implications and the responsibilities you’ll be taking on.
Get pre-approved for a mortgage.
If you’re going to require a mortgage to buy your investment property, it’s a good idea to get an Agreement in Principle from your lender before you start your property search. This will give you a clear idea of how much you can afford and make the buying process quicker and easier.
Plan ahead on financing your investment.
Compare the different borrowing methods and finance sources available. Make sure you understand the associated short and long-term costs before making a decision. It’s important to ensure that your investment will be a profitable one.
Negotiate the price.
Don’t be afraid to negotiate the price of a new build property. Developers are often willing to strike a deal, especially if you’re buying multiple properties or if you’re willing to pay in cash.
Understand the risks.
As with any investment, there are risks involved in investing in new build properties. These risks include:
- Rental demand in the area may fluctuate or be weaker than anticipated. You may not receive the annual return you expected.
- Property prices can go up as well as down. In the current market, it’s impossible to guarantee that the property will appreciate in value whilst you own it.
- Buy-to-let regulations can change (and have done significantly in recent years). This can add both administrative and financial pressure to your investment.
It’s important to carefully consider these risks before you invest in a new build property.
Get professional advice.
If you’re unsure about the strength of the market, or whether you’ll gain a return on your investment due to the asking price of the new build, it’s a good idea to seek professional advice. Talk to estate agents in the area as well as mortgage advisors to clarify the strength of the market in advance of making a decision. They can help you assess your investment goals and inform you as to whether you’ll be able to make a profit on the property in the current market.
By following these steps, you can invest in a new build with confidence that you have chosen a developer, property, and market that suits your needs.
Here are some additional tips for investing in the UK new build property market:
- Invest in areas with strong rental demand. This will help to ensure that you can find tenants for your property and generate a steady stream of rental income.
- Consider investing in multiple properties. This can be a good way to diversify your investment and potentially buy at a discount.
- If you are confident about the market and developer, you can look to buy off-plan. This means you purchase the property before it has been fully completed and can have a say in the build process.
- Consider how best to fund your project – buying with cash (if you’re able to) will save you money in interest, but it’s important to maintain a good cash flow due to the risks we identified earlier.
- If you’re short on time, consider using a property management company. Although their services come at a cost, they can save a great deal of time and hassle.
The UK new build property market can be a good investment for those who are looking for high returns and low maintenance costs. However, it’s important to do your research and understand the risks before you invest. By following the tips in this article, you can increase your chances of success.