Choosing the right developer is essential

October 13, 2022

Construction and building costs have been on the rise for many months and it’s no secret they’re causing delays on some projects, so how can property investors mitigate the risks?

For property investors buying property directly from the developer - which often involves investing off-plan before construction has completed or even commenced - it might seem that there is additional risk at the moment compared with buying an existing property.

Soaring inflation has been hitting construction costs, which some estimate could have climbed by as much as 15% in recent months. Sub-contractors are only able to hold quoted prices for so long before they are forced to increase them in-line with cost rises, and this is affecting progress on some development schemes.

Of course, like any business sector in the country at the moment, there is the risk of closures and insolvencies. However, the country’s housing market remains not only a viable investment avenue but an inherently strong one in the long-term, so despite the current difficulties, investors are continuing to see the value they can harness from the sector.

There are things property investors can do to give themselves additional reassurance when selecting a developer to work with, and a property to invest in. Ensuring you are well-researched will give you the confidence to progress with your purchase, and as always, keeping an eye to the long-term future rather than the short term is key to success in property investment.

‍

Do your own due diligence

Whether you’re a first-time property investor or treading a well-worn path towards your next opportunity, buying from a developer you feel you can trust is invaluable. Below are some important things to think about:

While there is nothing stopping investors working with brand-new developers, who may offer a better price, this of course can be a much more risky option than going with a well-established company with a track record. Not only will they have the experience and knowledge needed to complete the project, but they are also likely to have links and partnerships with a range of other services you might want to make use of, such as legal firms and property management companies.
Thanks to the ‘review culture’ we now live in, you should also be able to find plenty of customer experience records online for property developers. Of course, it is important to take an overall view of any reviews rather than hone in on any ‘bad’ experiences, as there may be more to the story, but reviews can give you a good picture of what to expect. Look out for negative press and news stories, too, as these could be red flags for an investor.
Who is the developer working with? There are many pieces to the puzzle when it comes to a new property development, and you should be able to find out who the developer collaborates with. Like you did with the developer themselves, you can conduct research on their partners to ensure you are happy with them, too. However, if the developer you are working with is worth their salt, they will be quick to replace any contractors should any issues with them arise.
Make sure you have checked all of the project details thoroughly, so you know when the project is due to start and what could impact this (such as funding), when it is due to complete, and how it will be funded. You should also find out how your deposit is covered and under what circumstances you would receive it back, as well as what contingency plans are in place for any funding shortfalls.

‍

If you are investing with the help of a property investment consultancy, they should be able to provide you with all the information you need about the developer, but you are still advised to conduct your own research to make sure that you are comfortable with who you are working with.

At The Prestbury Advisory, we only work with trusted, reputable property developers, so property investors who buy through us can be assured of a quality outcome. If you want to know more about the opportunities we’ve got available, get in touch with our team today on 01625 725 779, or email us at contact@theprestburyadvisory.com

Choosing the right developer is essential

You may also be interested in...

Demand for investment property in the North West is far higher than in London and the rest of the UK

UK asking price record broken: Is this a good time to buy UK property?

Manchester is the leading UK tech destination