Recent information from the financial services authority (FSA) suggests that second-hand or non new build flats are a better option for landlords than new build flats.
45% of buy to let property currently being repossessed are new build flats and apartments, despite them only making up 8% of the housing stock in the UK!
At Progressive we only build portfolios based around existing property where the purchase prices are lower and relative rents higher; therefore creating higher yields [your yearly return as a percentage].
This means that mortgages are easier to service making our portfolios more sustainable and ultimately creating a superior return.
We also believe that existing, non new build property grow in value at a faster rate than new build property.
Indeed, Stephen Ludlow of Ludlow Thompson [one of London’s biggest residential agents] states that the average price of non new build flats has gone up by 59% in the last five years as opposed to just 15% for new builds.
This huge disparity is likely to be that the new build properties were a lot more expensive than the existing properties initially and this gap has inevitably narrowed over time.
Once the glitz has gone the four most important over riding factors which influence a property's value are further exposed:
Location, Square Footage, Property type (house/flat etc) and type and quality of tenure (freehold, leasehold, remaining length of lease/covenants etc).
These comments will be old news to more experienced investors, however, many newer investors are now seeing through the marketing of some new build investment companies and basing their investment decisions on fact.