People who are taking their first step into the buy-to-let market face many daunting questions, and the most daunting question is: where do you start?
With many types of properties on the market all appearing to offer good returns on investment, it is important to keep a clear head and focus on what you believe will offer a good return. Some choose to go for a new build property and buy off-plan.
This article provides some guidelines to follow when buying a new build buy-to-let property.
Advantages of a new build
One of the advantages of buying a new build is it should come with a ten-year guarantee from the NHBC (National House Building Council). This will be very useful if any of the ‘snagging’ issues arise once the building has been completed.
Snagging often plagues new buildings. Outdoor lights fail to work, internal doors don’t fit, electric garage doors fail to open, and there are other teething troubles that may occur. If they do, contact the developer and let them put things right.
Another advantage is that some new builds come with energy saving insulation and devices which keep energy bills low. This is naturally a good selling point when it comes to letting the property. However, there are a few things you should look out for before committing to buying a new build.
Research the developer
You must do as much research as you can on the developer building your property. If possible check any of their previous developments to see if the homes meet your expectations. If the developer is online and has a community forum, see if it is possible to contact some of their past customers and get some feedback. Find out how quickly they dealt with issues like snagging inside the property, and what the standard of aftercare was like.
Make sure you are protected
You must also check if you are protected. Your solicitor will be able to check if the developer has the right insurance to safeguard you if they fail to complete or go bust after you have put a deposit down.
Mortgage deadlines
Another potential snag in buying off-plan is the deadlines. The majority of mortgage agreements are only valid for six months. If the developer’s completion date exceeds six months, you may have to reapply.
A snagging survey
We mentioned snagging earlier, those relatively minor but still irritating things that refuse to perform the task they were designed for. You must arrange for a snagging survey to identify any problems and arrange for the developer to fix them.
Ideally, a snagging survey should be done after the building has been finished and before the legal completion date. This will allow the developer time to put things right before your tenant moves in. Some developers refuse to allow a snagging survey before completion. If this happens you should arrange a survey as soon as you take possession of your property. However, you can have a snagging survey carried out during the first two years of owning the property, and the developer is obliged to correct any defects found during this time.
Maintenance
Although you have bought a brand new building, do not think it will never require any maintenance. As a landlord, you will be responsible for keeping your property safe and secure for your tenants.
When you do your sums on how much you will need to cover the mortgage and make a profit, make sure you make an allowance for some cash to be put aside to pay for maintaining your property.
When you buy a property, there are many snags that can trip the unwary. However, when you decide to purchase a buy-to-let property, there are many other things to be considered. Are you buying in an area people want to live in? What rent should you charge, and what are your responsibilities as a landlord?
We can answer these questions and many of the other questions you may want answers for about buying a buy-to-let property.
Contact us now and take advantage of our years of knowledge and experience in the letting business. We work to maximise returns on your rental property, so find out more about our rent guarantee scheme.