- Investing in property requires time and research into the market, location, and developer.
- Off-plan property should be seen as a mid to long-term investment. Gone are the days of buying and flipping property for fast profit.
- Buyers will need to secure a minimum down payment of 20%.
How to invest in off-plan property.
UK property remains one of the most stable asset classes, driving strong and consistent returns for investors and helping many achieve financial freedom. But developing a successful property portfolio doesn’t happen over-night; it takes research, professional advice and patience.
Every investment comes with its risks and property is no different. That’s why it’s important that investors go into their ventures with a clear understanding of their objectives and expectations.
When it comes to off-plan investments, the major advantage is to secure the purchase at a discounted price ahead of capital appreciation over the build period, giving investors instant equity in the property at the point of completion. To find out more about why to invest off plan.
This quick guide aims to help first-time or less seasoned investors with the first steps when considering investing in off-plan property.
The current UK property market.
Despite the unprecedented economic shock of COVID-19 and the uncertainty of Brexit, the UK property market has remained relatively stable and has performed exceptionally well this year.
House prices were up 8.8% in the year to June 2021 and remained high in Q3, up 7.4% in the year to September. Similarly, rental demand and prices are rising all over the country – great news for investors and the economy. In fact, according to Rightmove’s quarterly Rental Trends Tracker, rents are rising across Britain at the fastest rate ever recorded, now up 8.6% annually outside of London. The same report revealed that the capital’s rental growth was up by just 2.7%, demonstrating why many investors are turning to regional cities outside of London.
What should my first steps to investing in property be?
Whilst the UK economy and property market are stable, all investments come with their risks. It’s therefore important that every investor conducts thorough research into the market, property types, location and the developer.
1. Understand your objectives and budget.
Questions to consider: What kind of return would you like to see over what time period? What is more important to you – stronger long-term capital growth or higher rental yields?
Be aware that a minimum deposit of 20% is usually required, with the remaining 80% to be paid on completion (this is usually a few years later depending on when you purchase).
2. Conduct thorough research into the market.
Take a look at the most recent reports by leading real estate experts such as Knight Frank, JLL and letting agents such as Rightmove and Zoopla. All these sources publish helpful reports and news articles, educating yourself on the property market. The Property Insights Podcast is also an excellent place to stay up to date with the property market – subscribe on your platform of choice to avoid missing an episode!
3. Speak to a property consultant from a reputable developer.
No matter what stage you’re at, it’s always a good idea to get in touch with a property consultant who can answer any questions you may have. They’ll be able to give you advice, assets and recommendations to help you make your decision.
4. Before making a decision, speak with a mortgage or legal advisor.
Depending on which type of property you’re looking to invest in, you’ll have different mortgage options. For example, it is very difficult to get a mortgage on Purpose-Built Student Accommodation (PBSA), but they are still an attractive option as they are significantly cheaper than purpose-built residential property.
Understand the difference between investing in student and residential property.
5. Consider management options.
Tenancy and building management is often something new investors overlook until later in the decision-making process. Both are a great option to consider if you’re looking for a hands-off, hassle-free approach. Advertising your property and managing the tenancy process can be stressful and tedious, impacting your returns if occupancy is inconsistent.
Here are some things to consider when choosing your developer:
- It is important to trust your developer. Entering an investment should be based on a relationship that is built up over time at your own pace. Ensure you don’t feel pressured to make a decision before you are ready.
- Ensure that the developer has a portfolio of successfully launched developments, with high tenancy rates, strong yields and positive testimonials.
- If you can, arrange a meeting with the consultant to go and visit one of their existing developments. This will give you an idea of quality, service and credibility.
How to invest in property with Select Property.
At Select Property, our property consultants get an idea of your objectives, preferences and budget to recommend the most appropriate opportunities for you. We’ll send you relevant assets with more information on expected capital growth, rental yields, location, payment plans and more, for you to read in your own time. A relationship is then built up with the client through whichever form of contact you’d prefer – from face-to-face meetings to Zoom Calls to WhatsApp.
But the thing that sets us apart at Select Property is the end-to-end service we offer our investors, with dedicated Investor Services teams to guide you through each stage of the investment process, as well as an in-house brokerage to manage exit strategies on your behalf should you want to sell your property at any point, offering peace of mind from the beginning.
Get in touch with one of our property consultants today.