Happy Easter – Buying Off-Plan !
One of our landlords called the office last week to ask what we thought about buying property off-plan. He’d seen some flats being advertised on the site of the former nurses’ home at Fairfield House in West Green, Crawley. The site is being developed by Fabrica and they’ve been asking prospective purchasers to register their interest for the off-plan launch on 16th April. 1 bedroom flats are being marketed from £190000 & 2 beds from £240000. Fabrica can be contacted on 01293263083. Here’s the Rightmove link for a further details http://www.rightmove.co.uk/new-homes-for-sale/property-58469585.html?premiumA=true
The question posed by our landlord, like most in the world of property, is difficult to answer as there are so many variables to consider. For example, are property prices going to tumble due to recent tax hikes imposed on buy-to-let landlords ? What rental prices will the properties achieve when they’re built ? Are the properties going to be completed to a high standard ? Etc…..
One thing we would say about buying off-plan is not to be taken-in by hype. In every property transaction boring old “due diligence” is always the order of the day. If you ever hear of people queuing around the block to “snap up” property that is being sold off-plan as they did in 2007, my advice is to walk the other way as quicly as possible ! Although the long term trend in UK property prices has been upwards for a very long time, price corrections do occur from time to time, as we saw after the credit crunch of 2008.
That’s the warning out of way, so now let’s consider some of the details of the advertised off-plan development !
The site in West Green for this development is fairly central for Crawley town centre; close to the Asda supermarket; Crawley hospital and only a short walk to Crawley train station. One thing to look out for if you’re considering investing is the amount of parking available for each flat. Ideally you would need allocated parking (rather than first come first served). Our advice would be to try and secure as many parking spaces as possible. This may sound a bit greedy, but allocated parking spaces can really help to let your property quickly and possibly at a higher rent. As an investor who may be investing at an early stage of the development, you can often negotiate additional “perks” to be included with your purchase, such as parking – if you don’t ask you don’t get !
If you consider buying one of the two bedroom apartments at the development, there are a few keys areas to look out for. For the advertised marketing prices we would expect to see ensuite facilities to the main bedroom. If this is the case, make sure that the family (communal) bathroom has a shower over the bath and that the walls are tiled up to the ceiling in the “bath” area.
Also remember that for one reason or another developers often have different sized properties, with different facilities. For example, some may have balconies, while others do not. Make sure that you scrutinise the plans and secure the best sized properties with the most facilities for your money. Last but not least, don’t forget to ask when the site is scheduled for occupation. This will normally be phased over a period of time as different stages of the build project are completed.
So how do the properties stack-up as potential investments ?
Current rental prices for modern 1- & 2-bed flats in the area are in the region of £895-£975pcm & £1000-£1175pcm, respectively. These rents, together with the advertised marketing prices, give yields ranging from 5.7%-6.2% and 5%-5.9% for the 1- & 2-bed flats, respectively. Rental yields such as these are very good for the Crawley property market. However, please do bear in mind that these properties haven’t been built yet and actual rents achieved, as well as future capital growth, will very much depend on future market conditions.
However, in answering our landlords’ enquiry, we hope that we’ve also given you a pointer towards the pros & cons of buying property off-plan. If you’d like to discuss any of the issues detailed above or have any more general questions about property investment in and around Crawley, don’t hesitate to contact us. Our advice is free…. just give us a call on 01293 515588 or e-mail crawley@northwooduk.com.