New-Build Apartment Investment: Are Investors Paying Too Much?
Resale losses and mortgage valuation shortfalls are challenging the growth forecasts used to market new-build apartments. Jonathan Stephens examines asking prices, resale evidence and the questions investors should ask before purchasing.
By Jonathan Stephens, Managing Director, SmartLandlord
Published 17 September 2026
More than four in ten flats originally purchased new between 2015 and 2024 and first resold in 2025 sold below their original purchase price, according to Plumplot’s analysis of Land Registry transactions. Across England and Wales, the proportion was 42.4%.
The findings deserve attention in a market where investors are routinely presented with regional growth forecasts, regeneration plans and projected rental returns. The results achieved by previous buyers should receive equal prominence.
SmartLandlord continues to see developers and distributors promoting capital-growth and rental-income projections without providing sufficient supporting evidence. Investors are being encouraged to commit to the next phase of development without a clear account of how comparable completed properties have performed.
SmartLandlord View
“Buyer beware. Investors should be more rigorous in their asset selection, checking pricing claims against comparable completed sales recorded by HM Land Registry and rental projections against independent lettings evidence. Claims made by a developer or property distributor should be verified before contracts are exchanged.”
Jonathan Stephens, Managing Director, SmartLandlord
Historical growth cannot establish today’s value
London, Manchester, Birmingham, Leeds and Liverpool illustrate how a city’s historical investment story can dominate the sales case for new-build apartments today.
Earlier investors in these markets may have purchased before regeneration, employment growth and infrastructure improvements were reflected in residential values. Buyers entering today need to establish how much of that anticipated growth is already included in the asking price. Continued economic development does not guarantee an attractive return from an apartment bought at a substantial premium.
The type of property matters just as much. Zoopla reported in June 2026 that UK house prices had increased by 43% since 2016, compared with 10% for flats.
Presenting general house-price growth to an apartment investor can therefore create a misleading impression of how comparable properties have performed.
Agents recommending apartments should provide apartment-specific evidence. Regional forecasts offer context, but they do not establish the value or likely return of the property being sold.
New-build asking prices demand closer scrutiny
Selected two-bedroom new-build flats advertised on Rightmove carry asking prices substantially above the wider flat-market averages recorded by ONS and HM Land Registry.
| Market | Asking-price range across selected central new-build listings | ONS/HM Land Registry average flat price, July 2026 |
| Manchester city centre | £395,000–£500,000 | £195,000 — Manchester |
| Birmingham city centre | £416,000–£535,000 | £145,000 — Birmingham |
| Leeds city centre | £350,000–£360,000 | £152,000 — Leeds |
| Liverpool city centre | £425,000–£475,000 | £130,000 — Liverpool |
| London city centre | £1,295,000–£1,445,000 | £430,000 — Tower Hamlets |
Listings reviewed on 17 September 2026. These are selected asking-price ranges, not market averages or the full range of available prices. Birmingham, Leeds and Liverpool links open wider city searches. Official averages are provisional and cover flats and maisonettes of all sizes, both new and existing, across each local authority.
The scale of the gap raises a question about how closely some new-build asking prices reflect the wider apartment market.
City-centre locations, specification and amenities can justify a premium. The amount should be supported by completed sales of comparable properties, giving investors a basis for assessing what a future buyer might pay.
SmartLandlord’s concern is the potential disconnect between the price agreed with a developer and the value recognised by a mortgage lender at completion or a purchaser on resale.
Negative equity can restrict investors for years
Recovering an inflated purchase price can take years, particularly where that price was justified by unrealistic assumptions about future growth. SmartLandlord’s concern in parts of the investor-led apartment markets in Manchester, Birmingham, Leeds, Liverpool and London is that buyers may have paid upfront for gains that have yet to materialise, leaving limited headroom for further capital appreciation.
An investor does not need to experience a market downturn to face negative equity. Overpaying at acquisition can create that exposure from the outset if the property’s market value is below the outstanding mortgage balance.
The growth required to recover an overpayment can extend the investment far beyond its intended holding period. If the property’s market value is 25% below the price paid, that value must rise by approximately 33% simply to recover the purchase price. When it is 40% below the price paid, the required increase is approximately 67% before accounting for buying and selling costs.
Recovery could take years or, in some circumstances, decades. It is not guaranteed. A city’s continued economic development does not ensure that an individual apartment will regain an excessive purchase price.
Rental income can offset some of the financial impact, but only the amount retained after financing, operating costs, and taxes contributes to recovering the investor’s overall position.
Down-valuations can create an immediate funding shortfall
For off-plan investors, an unsupported purchase price can become a funding problem as soon as the development approaches completion.
SmartLandlord has received reports from investors whose mortgage valuations are substantially below the prices agreed with developers. These are individual reported cases, rather than evidence of a measured citywide down-valuation rate.
Consider a purchase agreed at £350,000 with an anticipated 75% mortgage of £262,500. If the lender values the completed apartment at £250,000 and offers 75% of that value, the loan would be £187,500. The investor must contribute an additional £75,000 to complete, on top of the originally planned deposit.
This illustrative calculation shows how a valuation shortfall can materially change the capital required before any rent is received.
The difference does not necessarily indicate a market decline. It may reflect an excessive original purchase price, changes during construction or issues specific to the property.
A lower mortgage valuation does not automatically reduce the contractual purchase price or release the buyer from their obligations. Independent legal advice on off-plan contractual and financing exposure should establish the consequences of a funding shortfall before contracts are exchanged.
Buyer beware before exchanging contracts
Before committing to an investor-led new-build apartment, investors should check:
- Completed sales. Verify the purchase price against recorded transactions for comparable flats, accounting for location, size, specification and lease terms.
- Previous resales. Establish what earlier buyers achieved when selling in the same development or comparable completed schemes.
- Achievable rent. Obtain independent evidence of agreed rents, rather than relying on advertised figures or the selling agent’s forecast.
- Ownership costs. Include service charges, management, maintenance, insurance, finance, tax and an allowance for void periods.
- Rental guarantees. Identify the party responsible for payment, its financial standing, contractual exclusions and the position when the guarantee expires.
- Mortgage availability. Ask a broker to assess the property, lease and development alongside the investor’s borrowing capacity.
- Completion funding. Calculate the additional capital required if the lender’s valuation is below the agreed purchase price.
- Contractual exposure. Instruct an independent solicitor to explain deposit protection, development delays and the consequences of being unable to complete.
- Resale demand. Assess whether the apartment would appeal to owner-occupiers and other landlords.
- Agent remuneration. Confirm who pays the agent, how much it receives and whether its recommendations are restricted to developments it is appointed to sell.
SmartLandlord’s guide to choosing a buy-to-let investment agent explains how to assess an agent’s market judgment, supporting evidence and commercial incentives.
The SmartLandlord position
Developers and distributors asking investors to commit substantial capital should substantiate their pricing with completed comparable sales and their rental forecasts with independently evidenced rents. Regional growth projections cannot justify a purchase price that the local apartment market does not support.
SmartLandlord strongly advises investors to verify this information before exchanging contracts, using HM Land Registry records, independent local lettings evidence and professional advice.
Our approach is to identify value at acquisition in markets supported by employment, housing demand and achievable rents. We assess resale prospects from the outset, including the likely buyer and their access to mortgage finance.
Correctly priced apartments can deliver attractive returns. Investors should not have to depend on years of capital growth simply to recover an overpayment.
Related SmartLandlord analysis
Our wider research examines pricing risks in heavily promoted apartment markets and opportunities in other regional locations.
Manchester’s new-build buy-to-let market – investor pricing, resale evidence and competition.
Liverpool property investment – the economic fundamentals behind the investment proposition.
Nottingham property investment – relative affordability, university-led demand and regeneration.
Peterborough property investment – population growth, employment and connectivity.
Preston property investment – affordable freehold housing and local rental demand.
Norwich property investment – an established regional economy and constrained central housing supply.
SmartLandlord
SmartLandlord helps investors assess property values, rental income, mortgageability, development risk, competing supply and long-term market fundamentals before purchasing.
Contact SmartLandlord to discuss an individual property, an off-plan commitment, or a wider UK buy-to-let strategy.
Editorial sources
Plumplot Losses on the first resale of new-build properties — analysis of Land Registry transactions
Zoopla Gap between house and flat prices reaches its widest level in 30 years
ONS / HM Land Registry Manchester house prices and private rents
ONS / HM Land Registry Birmingham house prices and private rents
ONS / HM Land Registry Leeds house prices and private rents
ONS / HM Land Registry Liverpool house prices and private rents
ONS / HM Land Registry Tower Hamlets house prices and private rents
Rightmove Manchester city-centre two-bedroom new-build flats
Rightmove Birmingham two-bedroom new-build flats
Rightmove Leeds two-bedroom new-build flats
Rightmove Liverpool two-bedroom new-build flats
Rightmove Canary Wharf two-bedroom new-build flats
City Residential Liverpool market commentary on auction properties and mortgageability
Disclaimer: This content is provided for general information and market commentary only and does not constitute financial, investment or tax advice. Property investment carries risk, and property values and rental income can go down as well as up. Past performance is not a reliable indicator of future results, and any forecasts or projected returns are illustrative only. Investors should conduct their own due diligence and seek independent professional advice before making investment decisions.
Get the latest property news and guides straight to your inbox.
Latest news
