New build flats

EdInvestor

Air-Wolf wrote: »

Developers are desperately trying to offload their flatted developments to landlords - private and asocial ones - thing is most are declining their offers!!

It's been reported many of these flats have been sold off plan to speculative "flippers", not serious BTL landlords.When it comes to completion they haven't sold, can't find tenants and end up being repo'd..

Vincenzo

Jorgan wrote: »

Last year I was asked to value part of a portfolio for a landlord, the guy had sold a business and property was 'easy money' (his words). He told me how he had negotiated really hard & the developer didn't know what had hit them. I valued his properties at £15-25k less than he paid for them. I asked him if had researched the area as he could have bought properties that were ten years old for a lot less, I was informed that 'you can't go wrong with newbuilds.' He recently went to auction with his entire portfolio, not one reached the reserve set.

Jorgan - what is you take on the issue of how these properties were overvalued in the first place?

Sure new builds generally have a 'premium' in built, until recently justified by the rising market. But my issue with many of these properties is that the developers have gone out of their way to deceive the mortgage lenders AND the valuers by offering incentives. The price paid, may be £280k for example, but with SDLT paid, deposit paid, solitiors fees paid, survey costs met, furniture packages etc etc actually the 'real' price paid for the property may only be £250k.

Jorgan, I trust you will know what I mean when I refer to 'headline rents'. Same thing, if you ask me.

Anyway, so when valuers check the sold prices with land registry or local agents etc....guess what.....£280k.......and so on......

I dont think the main problem is that these properties are falling in value. I think they were never worth the price paid in the first place. I have been telling my friends and family this for years and thankfully none of them got caught in the trap. As for the arm-chair buy-to-letters, well the figures clearly did not stack up and if they had to buy before they realised then more fool them.

Also - why has it taken so long for people to realise that the developers offer rental guarantees because there are not enough tenants to fill the developments??? This 'free money' is included in the price they pay for the property! And it all gets rather messy when the rental guarantees come to an end at the same time! A multitude of Landlords scrounging for tenants to try and pay a proportion of the mortgage interest - not pretty. These were never investments. They were a cleverly packaged rip off.

SouthCoast

The new build flat development mentioned in my #9 would have produced a rental yield of around 2.5% before any costs!

nelly_2

Air-Wolf wrote: »

And if you can keep your nerve and somehow financially manage it - your in a win win situation when the boom comes round again!

What?

the?

fcuk?

keep your nerve and somehow financially manage it

How about dont own something that you need to keep your nerve on?
how about not somehow financially manage it?

As it is today your money is earning far more in even the most bog standard bank acount than it is in properdee

People who are strung out on mortgage payments are sick of people like you mate

people who bought off plan and have lost loads and rented nothing out are sick of people like you mate

the property game has ended for many many years to come

everything has its day and it'll be ten or fifteen years before anyone makes money out of houses again............. maybe more

poppy10_2

loveandlight wrote: »

It's not just new build flats that are nose diving, it's the older ones as well.

The older new builds are really tanking, as their poor build quality is starting to reveal itself 2-3 years on.These plasterboard paradises don't look so nice once the initial shine wears off.

poppy10_2

EdInvestor wrote: »

It's been reported many of these flats have been sold off plan to speculative "flippers", not serious BTL landlords.When it comes to completion they haven't sold, can't find tenants and end up being repo'd..

http://property.timesonline.co.uk/tol/life_and_style/property/investment/article3590201.ece

The_Dangerman

nelly wrote: »

What?

the?

fcuk?

keep your nerve and somehow financially manage it

How about dont own something that you need to keep your nerve on?
how about not somehow financially manage it?

As it is today your money is earning far more in even the most bog standard bank acount than it is in properdee

People who are strung out on mortgage payments are sick of people like you mate

people who bought off plan and have lost loads and rented nothing out are sick of people like you mate

the property game has ended for many many years to come

everything has its day and it'll be ten or fifteen years before anyone makes money out of houses again............. maybe more

If people are foolish to make investments without doing any research about the rental market, or how much the property is worth more fool them.

I'm perplexed as to what it has to do with yourself though.

southernscouser

Pobby wrote: »

right at the end of a street which is full of pubs,kebab houses and nightclubs.

To me thats a selling point!

But I'm no yob. Just a drunken lout.

The_Dangerman

Vincenzo wrote: »

I dont think the main problem is that these properties are falling in value. I think they were never worth the price paid in the first place. I have been telling my friends and family this for years and thankfully none of them got caught in the trap. As for the arm-chair buy-to-letters, well the figures clearly did not stack up and if they had to buy before they realised then more fool them.

Also - why has it taken so long for people to relaise that the developers offer rental guarantees because there are not enough tenants to fill the developments??? This 'free money' is included in the price they pay for the property! And it all gets rather messy when the rental guarantees come to an end at the same time! A multitude of Landlords scrounging for tenants to try and pay a proportion of the mortgage interest - not pretty. These were never investments. They were a cleverly packaged rip off.

The big problem is the way they have been sold. The construction company are no good at selling them(hence why they build them!) so they offer the job lot on, with profit, to an "introducer". The introducer adds a huge wedge of profit on and sells them to gulliable, lazy BTLers, claiming they are "direct from the developer". During the boom, this wasn't a problem because the profit of the introducer was wiped out with rising prices, and some.

Now with much slower than expected growth, the flats are way overpriced due to the introducers fee not being covered, yet the BTLers buy them, and then wonder why they aren't worth what they paid.

But it gets worse! They have paid an inflated price for them, so try to charge too much rent to cover the mortgage, but suprise suprise, there are few takers. Double whammy.

If they had got it at the developers price, they could probably have made a go of it, its the middle men that have really being pulling the pants down on lazy BTLers.

There is nothing wrong with guareenteed rentals though, their is obviously going to be a flood of apartments when something is built, and the guareenteed rent will stagger it out, beceause not all the tennants will leave after 6 months.

HelpWhereIcan

EdInvestor wrote: »

It's been reported many of these flats have been sold off plan to speculative "flippers", not serious BTL landlords.When it comes to completion they haven't sold, can't find tenants and end up being repo'd..

Have a customer who nearly fell into this trap in 2006. The developer's agent convinced him that, even though the property did not stack up as a BTL, he would be able to sell the contract on at a profit before completion.

When he came to see me about another matter, he casually mentioned that he needed to call the developer's agent with his card number to reserve the plot. I, naturally, enquired about the mortgage and the whole thing came out. Luckily I helped him see the potential risks and he backed out.

Where was this flat guaranteed to have huge growth between 2006 and 2007? Leeds city centre. Could he have flipped the property? Not f'in likely.

Vincenzo wrote: »

The price paid, may be £280k for example, but with SDLT paid, deposit paid, solitiors fees paid, survey costs met, furniture packages etc etc actually the 'real' price paid for the property may only be £250k.

...

Anyway, so when valuers check the sold prices with land registry or local agents etc....guess what.....£280k.......and so on......

I know of one development by a major national builder near me that the HBoS group refused to lend on because their valuers (Colleys) had become aware of the amount of incentives that were being thrown at people. Stamp Duty, White Goods, carpets, legal fees, mortgage subsidy .. you name it. Anything to keep the price up.

Vincenzo wrote: »

Also - why has it taken so long for people to realise that the developers offer rental guarantees because there are not enough tenants to fill the developments??? This 'free money' is included in the price they pay for the property! And it all gets rather messy when the rental guarantees come to an end at the same time! A multitude of Landlords scrounging for tenants to try and pay a proportion of the mortgage interest - not pretty. These were never investments. They were a cleverly packaged rip off.

Favourites of certain investment clubs that are now going out of business. Even worse in the overseas market.

BTL is buyer beware ... do your homework, buy at the right price and never subsidise the rent. Too many people have forgotten this, but they will provide good opportunities for those that did not.