PLC Developers – Betting on Red
Much we do in life has risk attached to it and in the casinos of Monte Carlo, the options at the roulette wheel are laid out in front of you. Will you bet on red or black? Or are you feeling lucky enough to put it all on number 13? I confess to having no idea about how to win at roulette, but I do know that if you are going to the ‘property’ table without the correct assessment of risk, then you may come a cropper.
Those of us with limited experience at roulette should know to take just a small amount of money that we can afford to lose. But what if the stakes are raised? Would you be prepared to increase your stake from a few pounds to a thousand? Or would you increase it to £400,000 and be blindfolded at the same time? Sounds extreme doesn’t it, yet so many buyers are seduced by the PLC new home fantasy, that they are at times blind to the risks they are taking. People regularly ask me what I see are the pros and cons, so let me summarise.
It about what you can’t see
PLC developers are extremely clever in how they market their homes. Glossy brochures sell the dream lifestyle with sumptuous soft furnishings and clever lighting. We can all touch a beautiful sofa as we look around the stunning show home, but what about the things we can’t see? Do we know how the kitchen was assembled or whether quality fittings were used for the plumbing? How good is the fire protection and cavity wall insulation? Of course every business is entitled to a profit, but when the profit margin on each house is as much as 20% to 30% we have to ask how they achieve this, while at the same time being able to provide the luxurious lifestyle they promise? Usually, it’s behind the façade where the corners are cut, which you only find out after you’ve paid your money and moved in.
A high-risk strategy
Many of us look to property as an investment that will increase in value over time. As with any new consumable, there is a premium to be paid for it being brand new, which we willingly accept because we perceive the benefits to be worth it. The PLC developers shoe-horn their properties into our once green spaces, covering every available inch to maximise their profit margin. They have too small gardens to allow for extensions and attics are already devoted to extra bedrooms. The potential to add value to their homes has been stripped from the owners and they are left to rely on market appreciation for their home’s worth, a very high-risk strategy. I advise buyers to ask the PLC developer what the overall gross internal area is of the property you are interested in (they don’t openly publish this online). Then compare it with other properties available in the market and see if the value stacks up.
Shareholders first, property owners second
Of course, you might think a brand new property is covered by warranties and guarantees. My question to you is – have you ever tried to make a claim? Above all PLC developers have to report to their shareholders, so profit margins and maintaining share position are everything, not necessarily consumer best interests. Don’t believe me still? Just take a look at any of the reputable news portals.
We only have so much green space and yet the focus still seems to be on building new homes. But if you go into any town centre there are numerous empty buildings, which are likely to remain empty for the foreseeable future. Why don’t we renovate what we already have, regenerate our struggling town centres and incentivise the PLC developers accordingly?
However you feel, the next time you are down at the casino, don’t risk everything on the black, or you might find yourself well and truly in the red.