Investing in a new-build apartment? Here’s what to look out for

The principles which guide your decision to invest in a period home should be similar to those which guide your decision to invest in a new-build apartment. For example, rental yield potential, capital growth potential, who your target tenant is, and current and future tenant demand should all be areas of consideration when choosing where and what type of property to invest in.

If you’re planning to invest in a new-build apartment, you need to ask yourself the same questions you would ask if you were investing in a period home or any other type of property. Examples of such questions are:

• Is the property in the best location?
• Will the potential monthly yields cover my running costs?
• If I’m taking out a mortgage, will the potential monthly yields cover the repayments?
• Will a new-build apartment attract my preferred tenant?
• Is there potential for capital growth in the longer-term?

It’s worth noting that, though new-build developments in central London are popular with investors, the returns can be better if you invest in a period property. Period property is always limited in supply, whereas new-build apartments are popping up in areas across London, and this includes Marylebone. However, new-build apartments which are well-located and well-designed should bring in good returns in the longer-term.

Our advice? Either look to invest in an apartment which forms part of a smaller development (this means that if you decide to sell, it minimises the opportunity for your apartment and another apartment within the same development to be on the market for sale at the same time), or an established development with well-designed apartments where you can buy an apartment that’s not for sale at a premium price.

But investing in a new-build apartment can work well if you want a low-maintenance, ready to move in solution for renting. With a new-build, it is likely you’ll be able to move tenants in immediately and start drawing a monthly rent. If you take on a period property, it might not be in the best condition for renting, and you’ll need to spend time carrying out refurbishments before you can rent it out.

Investing in off-plan new build apartments
Buying ‘off-plan’ involves purchasing a property before it has been completed or even before it has been built. This option can work well for investors if, on completion, the property has increased in value. The buying process can also be easier and more flexible for buyers, but buyers should make sure they see all the plans and original property specifications before moving forward with anything.

There are many options for investors looking to invest in new-build apartments and flats in Marylebone, Baker Street, St John’s Wood, and other parts of central London. We have experience of helping investors find the best properties for their investment needs. Find out more.