Only way is upgrading
Ino secret that buying in the right location, location, location is key. Indeed, how many times do house hunters on TV shows say a property would be perfect if only it could be picked up and put in a different location? Of course, an exasperated presenter tells them that this would add thousands to the asking price. But then there’s no point buying somewhere you already know you don’t like, even if the property is better value – you’ve got to spend the foreseeable future there, after all. So what’s the solution? A good strategy is to look for an up-and-coming area, perhaps on the fringes of your preferred one, or the fringes of the fringes.
If prices have risen and other buyers on a budget have been pushed further and further out, this can lead to once-undesirable areas becoming more popular and improving as a result. If you can spot improving areas, or areas subject to investment and infrastructure changes, it often pays to get on the local property ladder before prices rise.
However, if you’re concerned about resale values, be careful not to get carried away and spend more on a property than it will be worth.
Even if a property seems like a steal, remember that it may cost more to buy and renovate than somewhere that’s more expensive to buy but needs less work. This is where research comes in.
Not only do you need to find out how long a property’s been on the market, what position the seller is in, what comparable properties are selling for and what property prices are doing locally, but also how much this property will cost to renovate. Get a full structural survey (RICS Building Survey) and then quotations for the work needed, so you’re realistic about your budget. To get an idea of costs before making an offer, go round the property with a good builder or surveyor.
Some properties are in such a bad state that only cash buyers are welcome. This can also be the case with properties of unusual construction, so if you need a mortgage, you’re more limited to what you can buy. Mortgage lenders usually expect the property to be habitable and although it’s perfectly possible to buy an unmodernised property with a mortgage, lenders sometimes retain some of the money until essential repairs are done.
With interest rates likely to rise fairly soon, property repossessions should increase, which is another way to find a bargain. You have to move very quickly when buying a repossession though, as the seller usually wants to exchange contracts and complete the sale within weeks. They’ll check that you’re in a position to do this before accepting, or even considering, your offer, so it’s not a route open to all buyers. It’s also a stressful way to buy, as the property remains on the market until exchange.
Moving quickly applies to buying at auction too. You have to exchange contracts on the spot, and complete within a set time, often 28 days, so buying with a mortgage isn’t always possible. Auctions are full of renovation projects and can be a good place to find bargains, providing you don’t get carried away in the heat of the moment and pay too much.