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This is my first post so please treat me gently.I have put a deposit down on an off plan development in Nottingham but I am now concerned that the supposed BMV value is way above the current market. It would appear looking at historical data that new build flats have not gone up in real terms for over 20 years, although this may now be changing. In fact those sold in early 2000s are selling for the same values or less now than when they first hit the market.I am finding it very difficult to use comparative data as the development is still just a plan in a brochure so how can you compare this to a 5 or 10 year old flat in close location? I am not feeling particularly confident in the whole scheme but not sure if this is genuine concern or just my risk averse nature and getting cold feet. If anyone out there with experience or a professional eye cold proffer some advice it would be much appreciated as it is not too late to withdraw from the offer with a substantial but comparatively small penalty. Happy to share figures if required.
A bit late to be doing your due diligence after you have paid the deposit. The developer builds the discount into the purchase price. New builds always come at a premium because they are essentially a new product. If you watch new build prices they tend to fall before they start to rise again. As anyone will tell you who tries to sell after owning the property for a short period.
But if you hold it long enough this won't matter unless you sell early and then you will crystallize a loss.
thank you for taking the time to reply; yes can only agree re due diligence.Was carried away by some slick sales and trust in a certain podcast that indicated this would be a great strategy for some capital appreciation. Only subsequently have I dug deeper and unearthed some concerns; it may be a 'great' deal but this won't be known until completion and then it really is too late.
Which Podcast is it?
Hi Mr C,
I've recently bought an off-plan in Liverpool (completing Q4 this year) so interested in your comment:
If you watch new build prices they tend to fall before they start to rise again. As anyone will tell you who tries to sell after owning the property for a short period.
Can you tell me a bit more about what this is based on? And what kind of time frames you are referring to for the fall then rise again?
Look on Rightmove also any developments near you that are nearly finished see if any resold or for sale. Usually on for less.Also personal experience of buying new build. Sold for same as purchase price 2 years later. It will vary on different areas and availability of property as well as the market cycle. So difficult to give an exact time frame. But how do you think developers make money?
Hope that helps.Marcus
Thanks for the reply. Yes I've been keeping an eye on rightmove.
I understand what you're saying but think that over time capital appreciation should also happen on new builds. I have seen this to be the case on some i was looking at in Birmingham too so hope for my sake it's the case in Liverpool! Planning to keep it for 5+ years at least anyway I think.
I agree with Marcus about DD
how do you have a substantial but comparatively small penalty?
if you can handle the loss I would pull out. There are lots of horror stories about off plan flats and the BMV price is usually BS price. A lot of areas are swamped with apartments that can’t sell.
Your brand new flat will be a five year old flat in 60 months time, that’s how you make comparison.
It is a substantial sum to me £6K but less than the £45k to completion.
Is there a guaranteed income with the flat?
I've always felt that Nottingham is a low capital appreciation, higher yielding area, so I'd say that a flat will not appreciate greatly in next 5 years.
I'd be very wary of a developer that needs to act in such a way to sell units. They'll be more likely to act in a more unscrupulous manner when charging ground rents and service charges.
Others may be aware, but Is there no way you can get your deposit back arguing that you have been missold?
Universal Property Services Ltd
Thanks for your thoughts; I think it would be hard to prove mis-sold until the unit comes onto the market, by then of course too late. I will fight for some recompense though.