The 5 key points of consideration when investing in New Build Residential in the UK
The Numbers: Capital Appreciation, Gross Yields, Net Yields and ROIs
Most investors are purchasing a residential investment for medium to long term returns via capital appreciation or strong net yields. I am hesitant to mention short term returns as property is a long term investment that requires intelligent and pragmatic investments that provide strong returns over time. When looking at a new build investment or any investment it is important to make sure the numbers stack up. At Amoka we can provide advice and analysis on these metrics prior to making any investment decisions.
Location Location Location
New build residential properties usually perform well when located in areas of strategic regeneration or urban areas with strong demand from homeowners, investors and renters. When purchasing an investment it is important to consider both the micro and macro market that the property is located within. Some important considerations include, transport links, employment opportunities, local amenities, schools and other public sector facilities and green spaces.
Developer Track Record
It is important to understand who the developers are of the property you are looking to purchase. Once understood it is important to research their track-record and their ability to maintain the property to a good standard. Not all developers are created equal and to de-risk the investment research on this topic is key.
Service Charges
The purpose of a service charge is to secure funds from occupiers of the building to maintain the properties common areas. These charges are usually calculated on a per square foot basis. Many investors see this as a lost form of revenue, but it is important to understand that the service charge is the main method in which the overall asset is maintained and therefore when exiting the investment the property should present well and be well maintained supporting exit values. It is important to ensure service charges are not overly onerous.
Length of Lease
The simple truth is the longer the lease the better. As a rule of thumb anything over 199 years should be the minimum consideration, however it is far better to secure a property with a lease of longer than 900 years.
