13 Buyers For Every UK Property

The UK housing market is booming with sales agreed up 57% in April 2021 compared to April 2019. Traditional estate agents are working 7-days a week to manage the demand from property buyers to manage the high volume of enquiries.

Estate agents for traditional re-sale properties (existing properties that are re-sold) are asking prospective buyers for their “best and final” offers to stop bidding wars, but buyers are still paying more than properties are worth as demand outstrips supply.

Property buyers are also resorting to extreme measures to find a property as those coming on to the market are sold quickly, leaving very little choice. The chief policy adviser at the National Association of Estate Agents (NAEA) commented “it’s quite aggressive out there. Some people are moving into rented property so they can move very quickly. There are people moving into caravans and living in the area so they can be quick to pounce if something comes on the market.” This is creating additional demand for the already restricted supply of properties to the rental market, which will inevitably cause upward pressure on rents.

Other extreme measures were reported, “We’ve got instances where prospective buyers have actually followed agents in cars to properties so they can be the first in line. Others are instructing buying agents who scour the market for properties on their behalf and composing hand-written letters to persuade buyers that they would be the best new owner.” Property buying agents add a further layer of cost to the property purchase; therefore, if you are buying property as in investment, this will diminish your return on investment.

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Property Buyers Paying Over the Property Value

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If an owner occupier is buying a property, they tend to buy with their heart and not their head; therefore, will be in most cases prepared to pay more for the property than a buy-to-let property investor, who will not have that emotional draw to the property as they assess based upon the figures.

This is putting off property investors from the re-sale market as it becomes harder to find a good deal that will produce a good rental income, long-term growth and overall return on investment.

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Benefits of Buying Off Plan New Build UK Property

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With the forecast 21.1.% growth of average UK property prices by 2025, savvy buy-to-let property investors are looking at alternatives to profit from the UK’s booming property market, without paying more than the property is worth.

Buying an off-plan property has become highly attractive to UK property investors. Buying a property 12-18 months off-plan (whilst it is still being built) is not appealing to most owner occupiers, who tend to buy a few months before the development completes at the earliest.

Property investors can have the choice of the best apartments within a development, that offers the best aspect and features by buying off-plan.

Prices are typically fixed; therefore, there is no gazumping / being outbid by another buyer. When you reserve an off-plan property, you pay a nominal reservation fee, which provides you with exclusivity for a month to exchange contracts on your selected apartment. There is no paying a buying agent fees for finding it and you don’t have to write the owner a letter explaining how you are the best buyer for their property.

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Return on Investment During Construction

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Buyers for off-plan property can also benefit from capital appreciation during the construction of the development, without paying mortgage interest, finding a tenant and managing the property.

For example, if you exchanged on a £150,000 property with a 20% deposit (£30,000) in a city such as Manchester in the North West of England, which was due to complete at the end of 2023, that property is forecast to increase in value by nearly 17% during construction.

This means that the gain would be £25,294 and you will have paid a deposit of £30,000. That is a return on your deposit of 84%.

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Buyer Incentives for Off Plan UK Property

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Many off-plan properties are sold by the developer with really good incentives, including:

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• Stamp Duty Land Tax contributions
• Legal fee contributions
• Furniture packs
• Interest accrued on your deposit and discounted from the purchase price
• Rental guarantees
• Discounted below market value property prices

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These are incentives that you simply would not get by purchasing a re-sale property in a hot property market. Imagine asking a seller of a re-sale property to pay your legal fees – it wouldn’t happen.

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High Rental Returns

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With the re-sale market being dominated by home buyers as opposed to buy-to-let investors, supply of rental property will diminish.

This means that rents will increase as a result of constrained supply. With more renters returning to the inner cities as the UK begins to re-open, buying an off-plan property in a popular city will put you in a fantastic position as a buy-to-let property investor, especially if that property is finished to a high standard and has access to outside space, such as a communal garden or even a balcony.

Click here to explore the range of opportunities on offer for savvy property investors like you to profit from the booming UK property market without paying over the odds.

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