New Home Buyers: The Investor
T hose buying a property as an investment, rather than a home, are always going to be a big part of the new-build housing market.
And at present a lot of this is driven by international buyers. Savvy foreign investors appreciate the strength of the UK housing market and are also using the weak position of sterling as an opportunity to buy property at a favourable rate.
But the lure is not all financial. British culture and history is also a draw. There is a certain cachet attached to owning property in the land of royalty, Dickens and Shakespeare – especially amongst Chinese investors.
Foreign investors often like to buy off-plan, as they tend to have large portfolios and want to act quickly and at a good price. They normally favour new central developments in big cities. And, although London used to be the most popular market, overseas investors are seeing they can get much more for their money away from the capital. This means that major regional conurbations like Manchester, Liverpool and Birmingham are increasingly popular.
Smaller towns and cities that are tech hotspots – such as Bristol and Cambridge – are also a draw. Places like this already have relatively high numbers of professional international workers, who often favour new-build rentals as homes. So these cities prove an attractive option for investors wanting a ready-made market for their properties. Cambridge, for example, has one of the highest proportions of Chinese-born residents in the country. This is leading to Chinese investors buying properties on the many new build estates, which are springing up near technology hubs on the city fringes.
Of course, UK investors are also looking to buy new builds. And domestic investors are more prepared to buy in smaller towns and cities, such as Norwich, Southampton and Sevenoaks, as they are more familiar with the UK. However, domestic investment – particularly for people dependent on mortgages – has been limited by the recent restrictions on the buy-to-let sector. This has hit the number of mortgaged buy-to-let transactions.
But – whether they are foreign or from the UK – there are common factors that attract all investors to buying new builds, which are related to the ease of buying property on a new development.
These are things like the minimum maintenance aspect of a new build, a home warranty that will protect them from many structural defects for a few years, and the lack of a buying chain. All this cuts down on the time and hassle attached to buying a property, which gives investors the opportunity to start earning quickly and without any hassle from tenants.
Digitisation of the entire lifecycle is becoming increasingly a key factor for investors. Automation of not only the sale process but the ability to remove paper and have access to accurate detailed information about the property helps an investor that cannot or does not want to have to be physically present. For investors, the basic information provided by developers must be supplemented by a more detailed inventory and documentation that a typical landlord requires. The advent of “digital logbooks” provide part of the solution, essentially these are a digital filing cabinet for your property documents and data. However, learnings from other sectors like banking and retail, show that initial digitalisation will soon have to be supplemented by engagement solutions – this is an area of specialism of mine which I’ll be covering in much more detail in future articles.