The new breed of luxury apartment blocks that now dominate the London skyline have proved very popular with the Buy-to-Let investor. Not only do these new built London apartments command premium rent, they attract the high end professional tenants many landlords prefer.
At Hurford Salvi Carr we work with many of our clients as they prepare to complete on their new built apartments and ready it for let. In this article we have prepared a check-list for those about to finalise the purchase of their new buy-to-let apartment and outline how to avoid some of the more common mistakes associated with the purchase of a new home.
Since many of these apartments are purchased off-plan it is important to visit the apartment prior to completion and the purchaser will be invited to a Pre-Completion Inspection. As part of our Managed Properties service we will send an agent with you on the Pre-Completion Inspection (PCI), if you wish. Even if you do not use a Managed Properties service there are some basic preliminary checks you can make to avoid the most predictable pitfalls associated with buying a newly built apartment to let.
Making the most of your Pre-completion Inspection (PCI)
The Pre-Completion Inspection usually takes place when the development is approaching completion but before the notice to complete is served. It is the point when the purchaser gets to see the finished apartment and has the opportunity to confirm that all the contractual requirements and specifications have been meet and that all the fixtures and fittings are in good working order. As an investor it is important that you take this opportunity to check everything and note any defects or problems that need to be dealt with before completion. In our experience it is never enough to assume that everything will be perfect and ready for tenants to move in.
We always walk through the property room by room and ask to be shown how everything works; and we recommend you do the same.
Ask a lot of questions: How does the extractor in the bathroom work to avoid condensation? Will that fridge door knock into the wall? Won’t that sticky door scratch the wood floor over time? How do you close a bifold door?
If you see something you are not happy with, then discuss it with the developer as many may accommodate your request, if it is within reason. Although remember, wood floors may be bouncy but will settle down. Everything may be covered in dust, but will be cleaned on completion.
Finally, if you are planning to use interior designers or are going to have curtains or blinds fitted, then the PCI offers the perfect opportunity for them to gain access to the apartment and take measurements for the fittings.
Preparing for your tenants
Most investors want to have the property tenanted as soon as possible and this means meeting different legal requirements and providing information to the tenants and letting agent. Click here to access this quarter’s Legal update.
Warranties and Certificates
Check what is under warranty and how long those warranties last. Make sure you understand how you will get the warranties; will they be at the property on completion; will they be sent to you; and is there anything that invalidates them. For instance, is there a specific product that must be used to clean a stone worktop, if so make sure such instructions are followed and the instructions are passed on to the prospective tenant.
Clarify with the developer how you will get the gas and electricity installation certificates. At Hurford Salvi Carr we recommend to our clients that they keep the originals themselves and provide copies to the tenant. This is because the originals may be needed in the future if you decide to sell or re-let the apartment. Often, the landlord’s gas safety is included in this documentation pack but it is best to check to avoid having to get another one later. These certificates are legal requirements for letting but not for occupying as an owner. Hence it is prudent to ask about them specifically.
Key Information – make notes
The details about each new building, its apartments and services vary considerably and even the most experienced professional can miss something. For this reason we always recommend that our clients take notes. This is not limited to the PCI but extends to meetings with agents, your solicitors and the developer’s representative at handover on the day of your completion.
It is important to know how things work in the apartment you have bought and in the new property development. Know who’s who in the customer care team; the names and contacts of the block managers and who to call if things go wrong.
At Hurford Salvi Carr we recommend that you give your tenants a list of emergency contacts. Then if things go wrong within the warranty period they can resolve the issue quickly and efficiently without involving the landlord or agent. Understanding which services are included and which incur a cost is vital. Many developers employ contractors and some of their services will be included in the management fees, but others may only be covered during the warranty period.
Finally A note on New Property Developments in London
All properties have their idiosyncrasies and the new luxury developments in London are no exception. The tenancy agreement is a useful vehicle to specify anything that has to be done to maintain the property in good order. Make sure anything that is non-standard is documented in the tenancy agreement under “Special Conditions”. For example new build properties may have an air circulation system that needs washing every 6 months. This is new territory for many landlords and it must not be assumed that a tenant will know that they must do this.
We also recommend that the property is visited within 6 months of completion to check for settlement cracks, which if found should be reported back to the developer immediately.
No matter how careful you are and even if you follow the advice above and use our checklist, things may wrong. To cover any unexpected circumstances knowing who to call means that you can deal with the issue swiftly and professionally. This not only keeps the tenants happy but preserves the value of your investment.
Often the first year after completion of a new development is the most eventful and making use of your agent’s knowledge and advice during this time can make things run more smoothly. Alternatively, many landlords prefer to use the property management services of their letting agent.