Buy-to-let investors secure huge discounts

The Financial Times reported this weekend that some investors were securing huge reductions on new build sales.

Where do professional landlords go for buy-to-let insurance?

Property developers and house builders who are struggling to sell in the current market are seeking to unload unsold housing units fearing further house price falls and needing cash to shore up their business.

Professional buy-to-let investors who are able to buy in bulk are finding some great deals and negotiating genuine large discounts, in some case up to 30% the paper reports.

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Mathew Tack, director of global investments at Hamptons International warns investors that: "This is a distinct window and by this time next year, these opportunities will be gone." The message to cash rich landlords is clear. They need to move fast to hunt out the best deals. Landlords are in particularly a strong position where:

* it is an apartment development because developers cannot mothball these projects
* the developer has completed a phase of development but has not sold all the units
* a scheme involving small developers who are exposed to high on going loan costs and cant cross subsidise costs from other parts of the business

New build opportunities

In all these cases it is essential for developers to sell quickly to generate the cash they need to keep the business afloat. In these circumstances developers may be prepared to sacrafice their profit in order to generate the cash they need. Most developers work on 20-25% profit margin before discounts and incentives. Landlord and buy-to-let investors should therefore be pushing for that kind of discount on any initial asking price.

Landlords however still need to be cautious about diving in too early and at too high a price. This is because with prices heading down and over supply in many city centre markets, a large discount still may not represent quite such a bargain over the long-term.