Any number of economic reports may have you wondering why some of the information targets construction firms and house building instead of inflation or jobs. The reason for this focus is straightforward: A steady supply of new homes is considered a dependable indicator for the housing market in particular and for economic growth in general and the UK government is keen to remove any obstacles that would hinder such progress. As a result, London has, for some time, been ‘ground zero’ for numerous large-scale property development schemes and the local authorities have played their part by making it easier for ambitious builders to cut through planning red tape. The payoff is that there is a marked rise in the number of homes being built with London and the South East leading the way. Any rental investors still having doubts about the viability of new builds as investment projects may like to consider the following:
Younger tenants, especially, like to work hard and play hard. It’s a philosophy that requires certain amenities to be both nearby and of sufficient quality. Developers cottoned on to this fact pretty quickly and have ensured that their new apartments come with on-site gyms, swimming pools and in many cases, restaurants, bars and shops. This self-contained feel goes hand in hand with the open plan layout of the apartments themselves which puts great value on space, ergonomics and natural light. Compared to an older conversion of comparable price, a new build apartment still feels like a lifestyle upgrade.
Buying “off-plan” has become synonymous with astute property investment and far-sighted planning. Starting with a modest deposit, landlords can purchase an apartment before construction, track property prices in the area and then sell when the development reaches completion. This frees up capital for further investment in the subsequent building phases and is a reliable wealth generator in markets like London and its fringe suburbs. Needless to say, this investment technique is only possible with a new build property.
Not being part of a chain is a homebuyer’s dream and new builds come free of such hassles. Unfortunately, last minute snags, extra haggling and incomplete paperwork are part and parcel of the buying process when you are relying on vendors to complete their deal before moving out. A new development has no such complications and you can pretty much set a fixed timetable as to when you can take possession of the property. They also have a NHBC guarantee which usually precludes the need for a time-consuming survey. All in all, buying a new build home is an altogether simpler process.
Your new build property can command rents that are generally ten to twenty percent higher than comparative period homes, although the sheer number of apartments concentrated in one place may, in some cases, dent this figure. Careful research and consultation will tell you whether the development of your choosing is unique enough to maintain its rental value. Hilltop and waterside views will always fetch more and with demand still outstripping supply, the future remains healthy.
The previously mentioned NHBC (National House-Building Council) issue a guarantee to most new build properties. Known as Buildmark, this certificate protects buyers from construction errors for ten years after completion of the build. This is a good selling point as well as being a plus with tenants. Also, with Buildmark, your deposit is protected should you buy off-plan and have the building company go into insolvency before completing the job.
Apart from being mindful of their heating and hot water costs, many tenants have ethical concerns when it comes to the impact that their accommodation makes on the environment. It’s been almost two years since the laws concerning the energy performance regulations were tightened. Since then, it has been illegal to rent out properties with a rating of F or lower. Again, new builds have the edge here, with most of them having an A or B rating, due to their superior insulation technology which also contributes to lower heating bills – another rental plus point. You can find more information on the latest legislation concerning Electricity Regulations here.
Of course, period properties have a charm that is altogether unique and there is no way that London would be the same without them. However, the hard-nosed investor will be looking to appeal to a wide clientele and may even be looking at property on London’s fringes as good transport links makes them more accessible. As developers open up new spaces and create neighbourhoods from scratch, the smart money is on the convenience and profitability of the new kids on the block.
If you are looking to buy or sell in a new build, get in touch.
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