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New Build Investment Guide

As more and more regeneration is being ploughed into the UK’s towns and cities, opulent new builds are reshaping the skylines of iconic cities like Manchester and Liverpool and pumping new life into their already thriving communities. But why should you invest in new builds and off plan property?

1. New Builds
2. New Build Energy Efficiency Revolution
3. Where is your new build located?

4. Receiving First Selection

5. Cutting-edge Designs to Meet your Needs

6. Off Plan Property

 

new builds uk

New Builds

 

The government has proposed one million new homes to be built by 2020, so now is the perfect time to invest in one of the many luxurious new builds emerging in the UK’s property hotspots.

 

There is a clear influx of new-build developments to meet the rising demands of Britain’s burgeoning population. New-builds are saturating the housing market and capturing the attention of first-time buyers, homeowners and buy-to-let investors.

 

The notion ‘they don’t build houses like they used to’ carries some truth and, contrary to what many believe, this can be considered a good thing! Building regulations have been strengthened over the years which means new build properties, designed for twenty-first-century living, should be less likely to suffer problems than period properties. Analysis by online estate agents, Sell House Fast, identified that by the end of last year, the rise in available new-build stock had achieved a year on year growth of 16%, with 163,250 newly completed homes across England.

New Build Energy Efficiency Revolution

 

New builds are built to the latest specifications using innovative materials. Energy efficient measures are now a key proponent of contemporary design.

 

Over 96% of new builds built in the past decade are rated A-C for energy efficiency compared to a measly 2% for old homes. Homeowners and tenants in new build homes can rely on their homes being warmer, healthier, more sustainable and most importantly, cheaper to run than older properties.

 

The Home Builders Federation (HBF), which represents more than 300 small and medium-sized private sector homebuilders in England and Wales, claims that on average a new-build buyer saves £52 a month on energy bills due to the energy-efficiency of their homes. This presents a total saving of £624 a year while living in a comfortable, well-designed house that exceeds the demands of modern-day living.

 

As a result of modern technologies, you are unlikely to incur costs for any major repairs in the short-term. According to a report by HBF:

off plan

Where is your new build located?

 

“Location, location, location”, the phrase that has been used since 1926 is just as relevant now as it was then.

 

Despite the many benefits of buying new build property, for any buy to let investment to be successful in the long-term, the rental yields need to be high enough and the property needs to be in the right location. Comprehensive market research and forecasting is essential when purchasing to achieve the most from your investment.

 

In new build buy to let opportunities, location is key when looking to stimulate growth within your purchase as certain areas within the UK property market grow faster than others. Regional growth aims to make transformational changes to help cities flourish and offer higher rental returns for investors encouraging capital appreciation.

 

Due to a growing trend for development on brownfield sites, many new build homes tend to be centrally located amongst multiple amenities. Properties in the heart of the action can ensure a lucrative investment. Transport links are a highly desirable factor for people looking to secure growth in their new build property. The two largest transport developments currently occurring across the UK are HS2 and the Northern Powerhouse Rail aiming to deliver a faster and more efficient service.

 

Without understanding both the local property market and the local socio-economic climate, you’ll be making an uninformed investment. Ask yourself the following: what demographic is the development aimed at? Is there currently existing demand? If not, where is the demand coming from? What factors are likely to affect the market in the short-term? Is there a specific public or private investment that is set to improve local market conditions?

 

We advise our investors to set their sights on the areas of the UK experiencing significant regeneration such as Manchester City Centre and Liverpool City Centre. These leading cities in the Northern Powerhouse are currently benefitting from multi-million-pound regeneration schemes.

Receiving First Selection

 

As with any property development, there will be more and less desirable units. Ask your agent to see floor plans and CGI images to find out which units have the best views or which units feature private balconies. North-south orientation is another big selling point for prospective tenants, as is proximity to lifts and public access in apartment blocks.

 

At RW Invest, we offer investors the unique opportunity to visit show apartments, true-to-scale replicas of our new builds, located in our Liverpool headquarters. Here investors get the chance to witness our apartments first-hand and appreciate the true finished quality of our new builds complete with all their fixtures and fittings ahead of actual completion.

 

Premium developers strive to incorporate state of the art designs into their properties. Often, new appliances and premium decoration can lead to premium pricing. Most tenants are willing to pay the premium rent for brand new living space, directly impacting the capitalisation rate and the return you should expect from your investment property. Ultimately, improving the quality of a new build may amount to fewer and shorter void periods when your property is untenanted due to increased appeal.

 

Buying a new build home enables you to add a personal touch to your property before you move in by instructing the developer how you envisage your home to look.

 

Purchasing a new build property early in the sales cycle, it is likely that by the time the home is inhabitable it will have increased in value. This is in contrast with purchases of an existing property, which often have to reside in the property for some time before seeing any capital appreciation.

 

Off-Plan Property

 

Purchasing off-plan property comes with a catalogue of potential benefits and acts as a cornerstone of future growth.

 

Off-plan property dominates the UK property market due to secure yields and increasing capital gains. Long-term investors largely consider UK property as a safe investment.

 

When buying off-plan you get to understand the pros and cons of a building before a brick has even been laid. In addition, discounts and incentives are also often available for this type of investment, such as interest on deposit during construction and discounts on bulk purchases.

 

Despite the many benefits of off-plan property, it’s not suitable for everyone. Buying off-plan isn’t always straightforward; you’ll need to do your research on the developer and obtaining a mortgage can sometimes prove difficult. This form of property investment is an especially good option for cash buyers.

 

If you’re considering buying off-plan, it’s always best to contact one of our Property Investment Consultants who have a wealth of knowledge about off-plan property. They’ll be able to talk you through your options and next steps in expanding your property portfolio. Alternatively, read our blog of top 10 tips to get you started in property investment.

 

The earlier you invest in off-plan property, the bigger the discount to market value may be. The developer is keen to get investors on board and therefore will offer the best discounts to early-stage buyers. Similarly, the initial purchase price will be below the current market value rate for properties of a similar type in the same area due to the developer forming the only part of the buyer’s chain, as opposed to a typical purchase of a completed property which could have multiple parties involved.

When you buy early, you also receive a better choice of property in the development. The best-located units will offer an increased potential for capital growth and rental income because of the increase in demand. Quite often, whilst in a strong market, off-plan buyers may well see the value of their property appreciate before they move in.

 

As the development matures, prices soar. If the property market is strong, these increases could grow exponentially. Some property investors buy off-plan property with the intention of selling before completion. Although this may seem like a good strategy for investors keen to make profit quickly, this is heavily reliant on the patterns in the housing market. More capital growth can be obtained by tenanting the property and gaining the benefit of a regular income, on top of the existing capital growth.


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A Buyers Guide To Off-Plan


Buying off-plan means buying a property before construction work has commenced. There are many advantages to this type of property investment, such as securing the best units and having an influence on design and specification during construction. As the value of your investment will increase during the construction period, off-plan property is an excellent way to achieve capital appreciation and secure a high return on investment. Before you begin, however, there are certain factors to consider.


Do your research


Comprehensive market research and forecasting is essential when purchasing to achieve the most from your investment. Without understanding both the local property market and the local socio-economic climate you will be investing blind. For example, questions such as: what demographic is the development aimed at? Is there currently existing demand? If not where is the demand coming from? What are the factors likely to affect the market in the short-term? Is there a particular public or private investment that is set to improve local market conditions?


Get in early


As an investor, you should be aware of where the major regeneration areas in a city are, where infrastructural improvements will be creating new value in the years ahead, and where commercial investment is taking place.


Successful off-plan developments are dependent on a high standard of existing infrastructure: good transport links, modern amenities, shops and restaurants, and educational facilities, are all crucial to create demand among prospective tenants.


As with any property development, there will be more and less desirable units. Investing is this type of property investment is a great way to ensure that you get the pick of the bunch. Ask your agent to see floor-plans and CGI images to ascertain which units have the best views. North-south orientation is another big selling point for prospective tenants, as is proximity to lifts and public access in apartment blocks. By investing this way you get to understand the pros and cons of a building before a brick has been laid. You can then ensure the property meets your requirements by influencing interior design and specifications.


Discounts and incentives are also often available for this type of investment, such as interest on deposit during construction and discounts on bulk purchases.


Despite the many benefits of structuring your investment in this way, it’s not suitable for everyone. The majority of lenders don’t design mortgages for off-plan purchases, so securing the funds can become complicated. This form of property investment is an especially good option for cash buyers.


About RW Invest


At RW Invest we specialise in connecting investors with the best opportunities. We only work with the leading developers and rental agents, and always undertake comprehensive due diligence on all our partners. Our consultants have expert knowledge of their local area and are ready to help you make the best decisions.

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