There are still reasonable margins to be had from developing existing property and new building. As always, start with the finances and keep in mind that summer property prices appear not to carry the same winter price tag… but they can sell quicker…
1) ‘True’ profit – Whether short, medium or long term investment, rental returns (as a percentage figure of purchase price / rental yield) can be used for cashflow and equity for capital growth
2) ‘True’ costs of development – Factor in unseen unexpected issues (even with a structural survey) or (this is the hard work route) for when flexibility with time is needed
3) ‘True’ property value – Take into account asking price considerations e.g. local market conditions, vendor pricing conditions and competition for the property
1. Planning Permissions and Permitted Development are two different things and alter in different parts of the country
2. Land can be purchased subject to satisfactory planning permission
3. Think about selling on; Can the property be converted by a new owner i.e. house to flats, flats back to house, etc.
4. Builders are allowed to recover the VAT on materials they supply for a job and zero-rate their supplies for new residential property; any supplies and work via a builder is VAT free. Some existing developments (for new dwellings) have a lower VAT rate e.g. one house into two flats
5. Lack of new build, the economy and tax changes are but a few areas to impact on market; don’t rely on price increases (especially in the short term) and, when renting out property, allow for void periods
6. Beware low rates on borrowings, that won’t support an investment when they rise. Run the numbers and speak with an Independent Broker (that’s us) for the best deals to suit your needs
7. Be aware of mortgage interest relief being replaced, run the numbers and speak with a qualified Accountant
8. Just as landlords need tenant references, tenants give feedback on landlords….
Image and Article credit: Copyright SUF © 2017