Buying off-plan
One of the best ways to build your property portfolio is to buy direct from Dandara ‘off-plan’. By purchasing before building begins, you can take advantage of special pre-construction prices and benefit from capital growth during the build-time.
- You can buy at a fixed price from a little as 5% deposit.
- There are no stage payments.
- The balance is paid on completion, which could be several years after you have paid your deposit.
- UK Stamp Duty starts at 0% for properties of up to £175,000, which covers most investment-type property.
uk stamp duty
| Residential property - purchase price |
Rate of Stamp Duty Land Tax |
| up to £175,000 |
0% |
| £175,001 - £250,000 |
1% |
| £250,001 - £500,000 |
3% |
| £500,001 or more |
4% |
Source: www.direct.gov.uk
Buying off-plan is easy
Local infrastructure and regeneration plans increase property values and ‘rent-ability’, and that’s why we thoroughly research every location we develop in, so that you have all the information you need to choose the off-plan investment that best suits your needs.
Through Dandara Lettings we also provide access to financial and legal advice and offer a full tenancy and property management service; we can even furnish your investment property for you - leaving you free to enjoy the return on your investment.
Contact us for details of our current off-plan investment opportunities in Hemel Hempstead and Glasgow.
Financing your off-plan investment
To optimise the return from your off-plan investment, it can be best to put down a deposit and take out a mortgage on the remaining amount, rather than to own the property outright - this is known as ‘gearing’. The following example shows how gearing works.
CASH PURCHASE
| Cost of property off-plan |
£100,000 |
| Invested Capital |
£100,000 |
| Finance |
None |
| Monthly costs
(letting agent, maintenance etc) |
£200 - (£2,400 per annum) |
| Rental Income |
£1,000 - (£12,000 per annum) |
| Net Income |
Annual Rental Income minus annual Costs
£12,000 - £2,400 = £9,600 |
| Rental Income |
£1,000 - (£12,000 per annum) |
| Return on Investment |
Net Income divided by Invested Capital = 9.6% p.a. |
Now compare this with returns for the same property using gearing to fund the purchase.
geared PURCHASE
| Cost of property off-plan |
£100,000 |
| Invested Capital |
£30,000 - (30% deposit) |
| Finance |
£70,000 - (70% mortgage) |
| Monthly costs
(letting agent, maintenance etc) |
£200 - (£2,400 per annum) |
| Interest-only Mortgage* |
£350 - (£4,200 per annum) |
| Rental Income |
£1,000 - (£12,000 per annum) |
| Net Income |
Annual Rental Income minus annual Costs
£12,000 - £2,400 = £9,600 |
| Rental Income |
Annual Rental Income minus annual Costs
£12,000 - £2,400 - £4,200 = £5,400
|
| Return on Investment |
Net Income divided by Invested Capital = 18% p.a. |
Although mortgage repayments will reduce your annual Net Income, the important thing to remember here is that your Capital Investment is only £30,000 instead of £100,000 and that your annual Return on Investment is almost double at 18%.
By purchasing off-plan and gearing your investment you can make your capital go further to purchase more buy-to-let properties or retain it for something else.
Related investment articles
Why invest in the UK
Why invest in Manchester
Why invest in Hemel Hempstead
Why invest in Glasgow
Why invest in Birmingham
Why invest in Isle of Man
Contact us
Find out more about off-plan opportunities from Dandara please fill in the contact form or call our investment sales team
Telephone: +44 (0) 161 829 3020
*Based on 6% interest-only mortgage. The figures shown in the examples
above are for illustrative purposes only and are not indicative of
actual costs or potential returns.