New Build Temptation
Property can be like a game of snakes and ladders. When you’re new to the lettings business hopefully you will climb a few ladders, but you can be particularly vulnerable to slithering down the occasional snake. Here are some of our top tips for avoiding the pitfalls.
NLA research tells us that 80% of smaller landlords with up-to four properties have new builds. These shiny new properties can be very tempting for buyers because of low maintenance and an easy-to-let asset being sold to them at a ‘discount’ by developers. But remember what the developer calls a discount is probably their target sale price and a constant supply of new builds can be vulnerable to price falls in a downturn.
Blocks of flats are often sold to investors, creating a surge of rental properties when the development is complete. The sales team may give you very optimistic figures for what rent could be achieved, but with many being rented at once it may well depress prices. As a leaseholder, you will also be beholden to block management charges and you may have broken a golden rule of investing – missing on the opportunity to add value.