The demand for new-build homes in the UK continues to thrive, with the first quarter of 2024 revealing that 19.1% of new-build homes listed across major cities have already found buyers, according to a recent report from Buy Association. This surge in interest is not limited to homebuyers; landlords are increasingly drawn to the benefits of new properties.
Despite the government’s recent tightening of energy efficiency standards for rental homes, new-builds have retained their appeal. With high energy bills and the ongoing cost of living crisis affecting many households, tenants are prioritizing energy efficiency to lower their expenses. Recent surveys indicate a growing tenant preference for energy-efficient homes, making new-builds an attractive option for both renters and landlords.
New-build properties offer numerous advantages to landlords, including minimal maintenance, the elimination of immediate upgrade needs, and compliance with future Energy Performance Certificate (EPC) regulations. These benefits make new-builds a strategic investment, especially as landlords seek to meet tenant demands while managing costs.
Securing Buy-to-Let Mortgages for New-Builds
Landlords wondering about the feasibility of obtaining buy-to-let mortgages for new-build properties can be reassured. According to industry experts, securing a mortgage for a new-build or even an off-plan property is entirely possible. The burgeoning construction of new apartment blocks in major UK cities has heightened demand for these mortgage products.
However, landlords should be aware that the criteria for securing a buy-to-let mortgage for a new-build might differ from those for existing properties. Revolution Brokers, a specialist in new-build purchases, advises potential investors to consult experienced mortgage brokers to navigate these nuances effectively.
Investing in new-builds offers several advantages, including lower maintenance costs, immediate rental income potential, and enhanced energy efficiency. Nonetheless, some lenders may require higher deposits for new-build mortgages, and the application process might involve more scrutiny due to the perceived risks.
West One Loans highlights these points but also underscores the myriad benefits: “Investing in new builds as part of your buy-to-let portfolio will have many advantages when compared to purchasing a second-hand property. The new build can appeal to tenants due to its newness; landlords may be able to charge a premium in rent because of the condition of the property, there will be minimal maintenance costs, property and goods will be under warranty and the property will meet proposed EPC regulations. And, as with a lot of things, new is often better.”
The Appeal of Off-Plan Investments
For landlords adopting a long-term investment strategy, purchasing property off-plan presents numerous benefits. The most significant advantage is the potential for greater capital growth and profitability. Securing a property before its completion often means obtaining a discount, which can enhance returns once the property enters the open market.
By buying direct from developers investors can often choose the best units within a development, further increasing the property’s attractiveness to prospective tenants. Off-plan investments also offer the benefits inherent to new-builds, including superior energy efficiency standards, a 10-year builder’s warranty, and new fixtures and fittings. These factors make such properties highly appealing to both buyers and renters, often commanding higher rents than older homes.
As the market for new-builds remains robust, both homebuyers and landlords find compelling reasons to invest, driven by energy efficiency, reduced maintenance, and the promise of immediate returns.