7 reasons to consider newly built for your next BtL

Old versus new? When it comes to investing in property, many landlords will be weighing up period properties versus 20th century homes but what doesn’t always get a look in are homes built in the last 10 years.

While brand new and nearly new may carry a premium at the purchase point, landlords shouldn’t write off a modern property. Here we look at seven sensible reasons why a newly built home can help balance the books and appeal to tenants. 

1.     Renters are ready to pay a premium: new data analysis from Unlatch found tenants will pay an average 23% premium for a newly built property, when compared to an older one. This figure can rise to a 41% premium in some parts of the country.
2.     Maintenance costs are negligible when it’s newer: new and recently built homes can be less troublesome than period properties. The all-new aspect of the structure, fixtures, fittings and appliances – facets covered by warranties and guarantees within the first few years – reduces a landlord’s maintenance spend.

3.     Stay ahead of changing energy requirements: landlords buying newer homes will gain a degree of future-proofing when it comes to meeting green targets. Thanks to a sustainable build and fit out, most newer homes have an EPC rating higher than the current, legally-required E. In addition, many will already have achieved the C rating that the Government wants to make compulsory for all lets by 2028.

4.     Appeal to energy-conscious tenants: in 2021, a survey found over half of renters questioned would pay more for a green home and a newer property ticks more than one eco box. As well as improved insulation, efficient central heating, and smart features that lower energy usage and reduce utility bills, new homes built with off-road parking from this year will have to include an electric vehicle charging point as standard.

5.     Secure the best buy-to-let mortgage: mortgage lenders are incentivising purchasers to buy green homes in return for lower interest rates, larger loans and cash back deals. A newer home with a good EPC will automatically qualify for special ‘green’ mortgage products being offered by some banks, potentially saving landlords hundreds of pounds every year in repayment costs.

6.     Avoid the void: whether a few years old or a first release, a new home is less likely to need a major upgrade or improvement works before it is let on the open market. This avoids any loss of rental income between sales completion and a tenant move-in date, while the good state of repair will minimise empty spells between future tenancies.

7.     Sniff out housebuilder incentives: those deciding to buy really new – as in before it’s built – can take advantage of picking the most desirable plot and also potentially benefit from value uplift while construction is underway (although prices can change in either direction). Even when completed units are marketed for sale, housebuilders are known to offer property investors incentives, such as paying their second home stamp duty bill, contributing towards the deposit or paying the buyer’s conveyancing costs.

If you are looking to expand your buy-to-let portfolio or are interested in becoming a first-time landlord, get in touch. We can advise on matters of rent, local tenant demand, yield and returns on rental properties of all ages.