Finding the right location is an integral part of any property investment strategy. Location and access to local amenities can have a bearing on rental incomes or sales prices. However, in some situations, investors can get all the benefits of these amenities without paying for them.
In this video, I explore this topic after noticing a separate development near my mentee client’s project in Fleet, Hampshire. Developers can use this trick when deciding where to invest in property.
How Nearby Developments Can Help Influence Where to Invest in Property
Across the road of a new major development, I am working on the conversion of a large commercial property into residential units. This job is expected to take another nine months to complete – but something very interesting is happening to the development nearby.
It’s a vast housing project of more than 300 houses. It will contain features like bus stops, doctor’s surgery, gyms, shops, and so on. These amenities will provide a real boost for nearby areas, making them more desirable. Bigger construction developers and main housebuilders are the types of people that are forced by the council to put in a lot of these amenities in the first phases of their development.
The reason that developers must make amenities available early is because of Community Infrastructure Levy (CIL) and Section 106 contributions. These UK property development rules mean local councils can enforce CIL payments, which fund the infrastructure the area needs.
It’s part of their section 106 payments. Part of their CIL payments goes into the infrastructure and amenities to give something back to the community. They don’t just dump a load of houses on the market.
What Payments are Typically Required for Renovation Projects?
While smaller housing renovations aren’t typically subject to Section 106 payments, there are still obligations to pay a community infrastructure levy on some projects, especially if you’re adding floor space. If you’re just doing conversions, then usually not.
How To Use Amenities To Your Advantage
While it’s not always easy to spot, investors can use this type of approach when evaluating where to invest in property. By understanding which other developments are happening in different areas, developers can choose to renovate a property representing an excellent ROI.
The same principle can apply to areas that are getting a new train line or other significant investments.
If you are considering investing, it’s worth looking at several factors that can increase your return on investment. Local building works that include infrastructure can improve the desirability of your rental location, which leads to larger rents or higher sales.
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