Investing in a new build property can be a rewarding venture, but the process of completing on a unit can be daunting, especially for those new to the UK property market. From dealing with legalities to managing rentals, there’s a lot to consider. Here’s a comprehensive guide to help you navigate the complexities and ensure a smooth transition from purchase to letting. Tips for UK investors completing a new build would include
1. Stay on Top of Legalities
Legal due diligence is the backbone of any successful property transaction. For new builds, it’s crucial to engage a solicitor who is well-versed in the specific legal requirements associated with new developments. Your solicitor will handle everything from checking the title and planning permissions to ensuring that the developer has fulfilled all obligations. Having a skilled legal team can prevent costly delays and legal issues down the line.
2. Finalize Your Mortgage Early
Securing financing for a new build requires careful timing. Lenders often need updated valuations close to the completion date, so it’s essential to have everything ready in advance. Coordinate with your mortgage provider to ensure that all paperwork is completed and funds are available when needed. Delays in financing can push back your completion date, affecting your ability to rent out the property. Some financial institutions may have a threshold on the volume of mortgages they provide in a development. If you delay with your financing then you may miss out on more competitive mortgage rates.
3. Plan Your Furnishing Strategy
One of the key decisions you’ll need to make is whether to furnish the property or leave it unfurnished. Furnishing can make your property more appealing to certain tenants, but it requires careful planning. Arrange for furniture delivery and installation as close to the completion date as possible to ensure that the property is ready for tenants without unnecessary delays. Yes, a furnishing a unit comes with a cost but it will minimize void period and will indirectly pay for itself over time.
4. Keep in Constant Communication with the Developer
The handover process in new developments can sometimes face delays. Developers are required to provide notice of the completion date, but these can shift. Regular communication with the developer will help you stay informed and adjust your plans accordingly. Knowing the exact timeline allows you to coordinate other aspects of your investment, such as tenant search and furnishing.
5. Engage with Letting and Management Professionals
With many units often coming to market at the same time, the competition to secure tenants can be fierce. This is where the expertise of a seasoned letting agent becomes invaluable. An experienced agent will help you set a competitive rental price, market your property effectively, and find quality tenants quickly. Additionally, if you’re not based in the UK, consider engaging a property management service. Firms like Walpole and Partners offer end-to-end services, from tenant management to property maintenance, making the entire process hassle-free.
6. Understand the Market Dynamics
When a new development is completed, the sudden influx of available rental units can affect the local market. Increased supply often leads to lower rental prices and longer void periods as tenants have more options to choose from. It’s important to be aware of these dynamics and set your rental expectations accordingly. Stay informed about local market trends and be prepared to adjust your strategy to stay competitive. Too often we have experienced situations whereby landlords have been overpromised by Letting agents on the rental figure that can be achieved. This is either a ploy to get your property in the books or an agent who is not familiar with market trends and market dynamics when a new development completes.
7. Competing with Other Landlords
As new developments typically release many units simultaneously, you’ll be competing with other landlords to attract tenants. Strategic pricing and marketing are key to standing out in a crowded market. Ensure that your property is well-presented, accurately priced, and marketed effectively to minimize vacancy periods.
8. Mitigate Void Periods with Early Marketing
To avoid costly void periods, it’s a good idea to start looking for tenants as soon as you have a confirmed completion date. Early advertising can help you secure tenants before the property is even ready, ensuring that you can start generating rental income immediately after completion.
9. Conduct a Thorough Snagging Inspection
Before you take possession of your new property, conduct a comprehensive snagging inspection. This process involves identifying any defects or unfinished work in the property. Make sure the developer addresses all issues before you accept the handover. A well-executed snagging inspection can save you from future headaches and ensure your property is in top condition for tenants.
Conclusion: Tips for UK investors completing a new build
Completing on a new development can be a complex process, but with the right approach and professional support, it can also be a highly rewarding investment. For new investors, engaging experienced professionals like Walpole and Partners is crucial to navigating this process smoothly. Remember, the influx of new rental units can impact prices and void periods, so staying informed and being proactive in your strategy will help you maximize your returns. At Walpole and Partners we are very experienced in new build investments from reservation right through to completion.
