When you’re dealing with brand spanking new properties, you can unfortunately look at things through rose-tinted glasses.
Gleaned with images of what it should look like in the brochure, and the dreams of how you’ll be involved using or earning from this new property, can cause a rough-ride when reality doesn’t meet these expectations.
To make matters worse, not only can it be hard to live up to such high-expectations anyway when it comes to a real-life asset, but if the quality of such construction is not to-par anyway then it can worsen things even more.
And although this is most pertinent with completely new developments, you can still suffer similar issues with any major refurbishment and redevelopment of any existing properties.
Plus, no matter what form of interest you have in the property, you will still be at the direct or more indirect receiving end of the issues and costs. Although a tenant or occupier will face directly, an investor or landlord can still be hit with lower returns or higher costs in their figures.
Oh yes, and let’s not forget those who get stuck in the middle of all this such as managing agents, contractors, and even middle-men developers.
Therefore, here are 5 key issues to know about upfront. 5 potential time-bombs that can cause an awful lot of grief when they go off after you’re then committed to the property.
1. Real-Life Occupation and Risk Assessments
This is a nasty one that can come back and bite, and that’s any assessments you need in order to make the building usable practically.
Typically this is through things like a Health & Safety or Fire Risk Assessment that is first carried out, which people assume mustn’t be required for new properties whereas in actual fact they are because they’re assessing how real people will be using the property.
So if you take an apartment block that is mainly occupied by retired people, then as assessment might suggest things like extra route signage, locks on cupboard doors, and easier access that in actual fact was not technically due under building regulations at construction but now really needed going forward.
These little things can add up and be a surprise for new people needing to pay for apparently new properties.
There may also be some other common-sense changes that would have been helpful for the developer to include, but may now shy away from this afterwards if wasn’t a black-and-white compliance issue.
So maybe extra or re-positioned lighting outside for safety, or the best one we’ve seen is where grassed areas were developed several feet higher at the rear of a garden but with iron fence all around stopping any form of access for a lawnmower.
It’s almost unbelievable, but these things do happen, with new owners and occupiers probably picking up the bill afterwards.
2. Snagging & Construction Detail
A classic one of course in terms of what niggly snagging items need doing, often within a certain warranty period.
Watch out for the big issues as well as the niggly ones, so not only a few shelves or doors to be re-hung, but, say, any water ingress from under a flat roof area.
Also be clear on what areas these cover, and who needs to report them to the developer. So, in a multi-let scenario each individual owner dealing with those in their own areas, whereas a managing agent for communal areas.
Plus, make sure you have any guarantees for longer term issues that may crop up with things beyond the initial snagging period, and with everything like this, always get this clearly documented in writing.
3. Future Costs and Values
You then need to see how your wallet is being hit over time, even though it is a new property interest.
So even many years in the future you may have routine redecorations to plan for, but preparing for them from day one will pay off.
In fact, any ‘planned maintenance’ is worth bottoming out sooner rather than later, as simple things like apparent self-painting rendering may well still need a good wash or new paint at some point, particularly if you have leaking gutter issues over them.
Whatever these are, make sure you then know how they will be charged, whether an owner direct or through a service charge for multi-let properties.
Unfortunately, it is a classic issue of service charge being too low in the first year to make things look nice and cheap at the beginning, but the reality of both normal and extra costs going forward can soon crank the costs up.
4. Insurance Cover & Values
The main concern with building insurance is that it is the correct policy on the right figures right from day one.
So, an obvious problem may be a new revaluation for the re-instatement value, which theoretically may not need doing for many years ahead, although any few freeholders may demand sooner for the reality of today’s as-built final cost being accounted for and causing an additional premium.
Also watch out for who is arranging this insurance, and what fees and commission are being agreed with middle-men parties like brokers and managing agents.
5. Included & Excluded Spaces
A final one sounds so simple, but can mean an awful lot if missed, and that’s knowing exactly what areas of space are and are not included with your property interest.
At first sight this can be a lot larger or smaller than what you think based upon just plans or a showroom, so try and get to see the actual space as soon as possible and ideally before completion.
And then consider all the little extras – so whether roof space is included with a top-floor flat, or space under a stairs or out-building. In fact, more non-property rights and services are also important like car parking and use of bin stores.
Living Up to the New
These above 5 issues should not act as a deterrent to getting involved with new-build properties, as after all there are many advantages to these, one of many being the new-look that comes with them.
These are more warnings and issues to then go ahead with open-eyed, after all if you were buying, say, a new car then you would likewise need to look at ancillary issues such as warranty cover and insurance.
Getting to grips with these early on will therefore save time and cost later; ideally before anything does go pear-shaped, or at least immediately afterwards.
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