Some were simply sourcing companies acting as Agents
on behalf of the building company or developer to
secure sales. Others actually used bulk buying power
to purchase a large chunk of a development themselves,
in order to sell individual units at a profit to
Investors. Many even ran courses and charged membership
fees for the privilege of buying properties off
them.
There
has been some bad press with criticism from some
that these schemes and companies have actually been
responsible for over pricing and artificially inflating
values.
It
is unfortunate that some Investors have perhaps
made wrong choices when investing in new build properties
and are now in a position of negative equity and
rental values not coving the mortgage payments.
Perhaps it is the sourcing companies fault, or perhaps
the Investor themselves should have been more thorough
in their due
diligence.
There
are some very ethical companies who still specialise
in new build and off plan properties and offer some
extremely good opportunities.
Developers
will always try to secure some level of investment
whilst new build properties are still at the planning
stage. This shows lenders that the scheme is worthwhile
and indicates to other investors that the development
is a viable option. It is usual for the developer
to offer incentives in the way form of discounts
offered on the perceived RICS
valuation of the finished development, free furniture
packages, free legal costs etc. The discounts offered
at the planning stage are often greater than any
other discount that may be offered by the developer
at later stages.
