The London residential market is rapidly moving into what looks like it could be a 3-year property boom. Prices are now on the rise and over the next 6 months a lot of the New Build supply will dry up.
Right now there is enough stock around to enable buyers to choose well.
Before signing that reservation form let’s see what buyers should be looking out for – Here is a point checklist:
Near the middle is always good. Look at a tube map. This gives you zones 1, 2, 3, 4, 5 and 6. The best locations tend to be in the centre. However for investment property we need yield too, so that the mortgage gets paid. This means that zones 2 and 3 will provide the best balance of capital gain plus yield.
Everyone nowadays judges a rental flat by “time/distance” to the office.
There are 3 main office centres in London.
a. Old City of London
c. West End
The tube and DLR are the best and fastest transport systems.
The tube has 11 lines so check that you have links to at least one or two of the essential ones. Then for Canary, check DLR links.
What you need to ideally achieve is total travel time of around 30 minutes. This is very acceptable. Make sure you add walking time from flat to station and station to office.
In a perfect world 5 minutes to station, 20 minutes travel, 5 minutes to the office is ideal.
So to make life easy make certain that the property you are buying is a short walk from the tube with easy access to the three main office centres.
New build should carry a 10-year structural guarantee. This is essentially an insurance policy where the insurance company keeps a very close eye on the developer. This involves regular site inspection and a close look at the developers track record. It provides excellent protection for the buyer so just make sure that this is a part of the package.
4. The Bank
Finance always plays a big part in investment property decisions.
Currently up to 70% financing should be possible on new developments. Make sure you have access to at least three separate banks.
New build takes 18 months to two years to finish so just be sure you have in mind three banks who are currently lending on London. GIHLondon have a mortgage department that can offer you a quick check list of both banks and simplified lending criteria.
5. The annoying bits and pieces
Most tenants want a furnished flat, so a “package” is the way to go. GIHLondon have a lot of experience here so that you don’t waste money on unnecessary furnishings. You just buy the package and they install it.
All UK conveyancing lawyers can handle New Build adequately. Really you need two things from a lawyer – good communication and cheap legal fees.
GIHLondon appoint one independent law firm to act for all buyers in a project. This saves huge money. The lawyers just check over the building once then issue contracts to all the buyers that practically have the same wording. This means that with one firm appointed, the buyer can save 25% on legal costs.
c. The Lease
Rule of thumb is don’t touch anything under 100 years. Have enough time to own the flat, your children own the flat and the next buyer to own the flat.
The best lease is 999 years. Most leases are around 250 years. All very acceptable.
d. The Floor
Don’t buy basement. Try and avoid ground floor (unless it has a garden). Anything 1/F and above is good. Be prepared to pay extra for high floors. Well worth it in London as views can be excellent due to most building being low in height.
This is very important. Card entry into the building is ideal. Most New Build will be very acceptable on security.
What you need to look out for is the walk from the flat to the tube station.
– Is it well lit?
– Do you go through long pedestrian tunnels?
Essentially is it a “safe” walk. Do double check on this and ask plenty of questions.
This is not an exhaustive guide but hopefully helps you in what to look out for.
Current GIHLondon new build projects can be viewed here