New build flats - deposit paid?
Discussion
Southampton is currently undergoing a large amount of flat building, and it seems that some of the developers are struggling to sell. Hence, some of the developments now have big banners outside advertising deals. For instance, 5% deposit paid and mortgage paid for the first year.
Now, I'm very sceptical of such "too good to be true" deals but as somebody who has yet to climb onto the property ladder, and who has no deposit at the moment, I was wondering if anybody knows the likely catches in such a deal?
Now, I'm very sceptical of such "too good to be true" deals but as somebody who has yet to climb onto the property ladder, and who has no deposit at the moment, I was wondering if anybody knows the likely catches in such a deal?
aspender,
Common practice and its no sign of strggling developers. 5% gifted deposit is accepteable to lenders too. Mortgage paid for a year is around 6% ish sho if offering both thats around 10% towards purchase, and the mortgage paid is taken out of the money you have paid on completion.
If you need to buy and are going to be short of cash in the first year then go for it.
Common practice and its no sign of strggling developers. 5% gifted deposit is accepteable to lenders too. Mortgage paid for a year is around 6% ish sho if offering both thats around 10% towards purchase, and the mortgage paid is taken out of the money you have paid on completion.
If you need to buy and are going to be short of cash in the first year then go for it.
I think you could be right Aspender, there is a huge amount of flats being built around St Marys Ocean Village and by the seamans Mission area. There is a glut of buy to let flats trying to be sold in the area and it has slowed somewhat. Biggest mistakeI made was not buying a flat on Northen Bridge IIRC I could have bought one for £85,000 ish two bed third floor, What put me off was the scrap yard opposite and busy road, but water front property, 5 years on almost £200,000, Doh!
That's the thing. My main concern would be that oversupply would damage my investment. I currently rent in Ocean Village where I know for a fact that Wilson Bowden are really struggling with the new development here. Four blocks have gone up, and have not fully sold, and development on the rest of the site has halted. I think they are even having problems with filling the retail/restaurant outlets.
The flats with the aforementioned advertisements are in the new lot going behind the Seaman's mission. In an area crammed with flats, or building work for new ones.
Although we would probably live in the flat for a couple of years, after that I'd want to let it out and my experience suggests there is no shortage of flat property available to rent in Southampton at the moment, which surely cannot bode well for future prices and the prospects for rental income.
The flats with the aforementioned advertisements are in the new lot going behind the Seaman's mission. In an area crammed with flats, or building work for new ones.
Although we would probably live in the flat for a couple of years, after that I'd want to let it out and my experience suggests there is no shortage of flat property available to rent in Southampton at the moment, which surely cannot bode well for future prices and the prospects for rental income.
^^^^^^^
What he said - add to that that the additional cost in solicitors fees when buying/selling is usually around £150+vat and that there are also more disbursements to be paid for a buyer. Not so usually when you are the first one but the subsequent buyers have to raise enquires of the managing agents, for which they will charge iro £150+Vat to answer and there is also often a direct deed covenant to be entered into with the landlord which they will charge iro £200+Vat for!
This, as I say is not a problem per se for the 1st buyer but I have had client's back out of a deal when they have realised that it's going to cost nearly £500-£1k more to buy.
Oh and if you are looking at renting it out don't forget that most modern leases require that you obtain the consent of the Landlord to this, each time you renew the AST, that'll be another £75-£100+Vat a go. Lots of little bits to keep chipping into your hard earned.
What he said - add to that that the additional cost in solicitors fees when buying/selling is usually around £150+vat and that there are also more disbursements to be paid for a buyer. Not so usually when you are the first one but the subsequent buyers have to raise enquires of the managing agents, for which they will charge iro £150+Vat to answer and there is also often a direct deed covenant to be entered into with the landlord which they will charge iro £200+Vat for!
This, as I say is not a problem per se for the 1st buyer but I have had client's back out of a deal when they have realised that it's going to cost nearly £500-£1k more to buy.
Oh and if you are looking at renting it out don't forget that most modern leases require that you obtain the consent of the Landlord to this, each time you renew the AST, that'll be another £75-£100+Vat a go. Lots of little bits to keep chipping into your hard earned.
rich1231 said:
aspender,
Common practice and its no sign of strggling developers. 5% gifted deposit is accepteable to lenders too. Mortgage paid for a year is around 6% ish sho if offering both thats around 10% towards purchase, and the mortgage paid is taken out of the money you have paid on completion.
If you need to buy and are going to be short of cash in the first year then go for it.
the vendor assisted deposit deals are limited among lenders, if you're going down this route get the builder to reduce the price by 5% rather than offer to pay 5% deposit on completion as this will make the process soooo much simpler for you. also, the mortgage paid for a year is usually (but not always
) paid as a cash lump sum up front eg £300 pcm X 12 = lump sum of £3600 which is frequently used to fund deposits... Yep perfectly normal 
also take advantage and offer them less if they are struggling to sell... don't ask, don't get
Might be worth speaking to a mortgage broker to see not only the cheapest rate but a lender who can move fast, get a good solicitor and offer them a fourteen day exchange instead of them demanding a 28 day exchange as is common for new homes companies to do.
This commitment should go someway to them looking at an offer... beware though... a fourteen day exchange is no mean feat but I've seen it done
Also if your prepared to wait a while... buy the showhome off plan, you will get it cheaper, plus the company will rent it back off you for a year or more as a 'demonstrator' Low purchase price and mortgage paid for a year, can't be bad
also take advantage and offer them less if they are struggling to sell... don't ask, don't get
Might be worth speaking to a mortgage broker to see not only the cheapest rate but a lender who can move fast, get a good solicitor and offer them a fourteen day exchange instead of them demanding a 28 day exchange as is common for new homes companies to do.
This commitment should go someway to them looking at an offer... beware though... a fourteen day exchange is no mean feat but I've seen it done
Also if your prepared to wait a while... buy the showhome off plan, you will get it cheaper, plus the company will rent it back off you for a year or more as a 'demonstrator' Low purchase price and mortgage paid for a year, can't be bad
KingRichard said:
Yep perfectly normal
also take advantage and offer them less if they are struggling to sell... don't ask, don't get
wise words indeed
always worth bargaining down a new build purchase as their prices are often speculative anyway. KingRichard said:
Might be worth speaking to a mortgage broker to see not only the cheapest rate but a lender who can move fast, get a good solicitor and offer them a fourteen day exchange instead of them demanding a 28 day exchange as is common for new homes companies to do.
KingRichard said:
This commitment should go someway to them looking at an offer... beware though... a fourteen day exchange is no mean feat but I've seen it done
just had a NR deal sign up on 14th may, got the offer on the 19th, completed today. sweeeet.
it was a new build though, and the survey is cursory at best
>> Edited by minimax on Tuesday 31st May 23:36
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