As new regulations and frustrating sale processes make building and selling residential blocks even tougher, it's refreshing to know there's a simpler, kookier method.
Building a block of apartments is becoming an increasingly complicated process with more and more obstacles being put in the way with regards to construction regulations. Alongside this, ensuring the development is built to time and budget and making sure all the apartments are sold means everyone needs to at the top of their game.
Whether you sell to individual purchasers or a single investor, it can be an awkward and testing process.
Selling to Individual Purchasers
If you are selling a development to multiple individual purchasers, it can be a frustrating, drawn-out process. The first task is all the marketing work that goes into making the buyers want to commit to purchasing the building. Next, a deal needs to be agreed with each of them, which is no easy task, especially when it’s a buyers’ market.
Then add the necessary evil of the legal process, where every solicitor has different opinions, needs and requests throughout the conveyancing process. Add to this the fact that mortgage surveyors and lenders seem determined to obstruct where they can, getting all the sales to exchange and complete is no easy task.
So, you have multiple buyers to guide through to exchange and completion, multiple mortgage valuations, multiple mortgage offers, multiple completions, and eventually (and some would say the hard work starts at this point) multiple end users with never-ending demands.
Selling to a Single Investor
In an ideal world, most housebuilders would like to find a single purchaser for a block of apartments at a price that is acceptable, meaning only one buyer and one solicitor to deal with.
Agreeing a bulk deal does occasionally happen. However, this again can be a very fraught process with potentially too many eggs in one basket for the housebuilder.
The first hurdle is getting a price agreed that is acceptable to both parties. Most bulk buyers believe themselves to be invaluable to the housebuilder and therefore believe they have the right to ask for discounts at levels that generally do not work for the housebuilder.
If a price can be agreed, then it’s down to the lawyers to commence battle. This can be a long and painful process – why can’t they just get the deal done quickly? This part can sometimes drag on for months and then, quite often, fall through, leaving the housebuilder in an unfortunate position with unsold units.
It’s easy to blame the lawyers for the endless dialogue and time it takes to get to the exchange of contracts, but it is just the way our legal system is. The process really isn’t designed around speed and simplicity.
There is a better way
Fortunately, our Kooky BTR purchasing process provides a better solution. We are actively looking for under construction or built residential developments of up to 300 units. Once we have been offered a suitable opportunity, we will work swiftly to produce a board approved offer.
We know developers don’t want to be waiting around for valuations when they already have a figure in mind. So, at Kooky we think it’s time to throw the Red Book out the window and have taken matters into our own hands by conducting our in-house valuations to speed everything up, allowing us to agree on a balanced number that works for the seller and buyer.
Once the sale is agreed, we issue a well-balanced legal contract based on a tried and tested template. This saves more time by skipping the drafting process which can add more complications to the contract exchange. It also takes the pressure and additional legal costs away from the housebuilder, who can be left to focus on what they know best, finishing the building. We aim to exchange on our purchases in as little as one month, so our legal team prioritise clear timescales and quick exchanges.
Kooky - A refreshing approach
The reason exchanging contracts takes so long is because of all the red tape that surrounds the process. Instead of looking for ways to streamline this, the industry seems to have just accepted traditional timescales. However, at Kooky we think everyone deserves better, faster BTR, so we can keep things moving without any speedbumps slowing us down.
We have all the decision-makers under one roof. Our acquisitions team do the initial research, our in-house counsel makes sure the legal process flows smoothly and our Managing Directors are there to sign contracts.
We are a small and nimble team; we make fast decisions and move the buying process on quickly. To find out more about us and how we work, please get in touch with Nicholas Belkin, our Head of Acquisitions, on 0207 907 5555.