Landlord warns investors off plan

Author: By Jonathan Boyd

IFAonline | 07 Jul 2004 | 09:00

Investing in off-plan properties comes with particular challenges that consumers must bear in mind given today’s market of rising interest rates and potentially falling yields, says Landlord Mortgages.

The lender says it is still possible to get properties at the right price, but there are a number of issues any investor should think about.

These include:

Genuine discounts – make sure you get one

Finanicially viable – make sure the price is at a discount to current market value

Property sourcing companies – avoid them

Investor ‘flooding’ – avoid developments where 30%+ of plots are being sold to investors rather than owner occupiers

Developer incentives – watch prices inflated by developers in exchange for incentives such as ‘stamp duty paid’

Availablity against demand – check the rental market supports sufficient demand for the type of property being bought

Limiting risk – mortgage lenders limit the number of buy-to-let mortgages they offer on single developments

Forward pricing – may work if prices are rising at 25% annually, but otherwise should be avoided

Research – always do own research and avoid relying on facts provided by those with vested interests.

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