As a landlord or property investor, it’s crucial that you choose the right type of properties to invest in – properties that tenants will want to live in and ones that will attract their attentions in the first place.
One type of property that is likely to pique the interest of a wide range of would-be tenants is new-builds, which will appeal to those looking for modern, urban, well-furnished living in all its glory. Not all investors will consider new build properties for rental; memories of the property crash and the role of new build in this are too raw. It can also be difficult to obtain a satisfactory yield with new build.
However there are many upsides to investing in this style of property. Below, using our experience as West Lothian’s first dedicated lettings agency, we outline what some of these are.
One of the most annoying and frustrating things about buying a property – whether you’re a first-time property investor, a landlord looking to expand your portfolio or a first-time buyer – is a breakdown in chains, which are sadly all too common in the world of property.
Buying a new build, however, means you are purchasing straight from the developers, which means you avoid complex, confusing and potentially vulnerable chains.
Some developers will also offer new-builds at below market value, which means you could pay less for a home that will end up making you some excellent rental yields in the future. There are pros and cons to buying below market value, but it’s something canny investors should definitely consider.
As you would expect, new build homes require less maintenance because of their age. An older home might have issues with things such as damp, structural damage and mould, whereas new build homes will have been built to latest specifications and this should mean that major repairs are not necessary for at least the first few years.
What’s more, new-build homes come with a 10-year NHBC warranty which covers structural defects, while most developers are likely to provide their own two-year warranty packages.
A new build home should, in theory, be less susceptible to wear and tear and maintenance issues and will therefore require less care and attention than an older property might.
This will help save you money in the short-term and hopefully in the long-term, too. There are no guarantees on this, of course, but major repairs should be kept to a minimum with a new-build home.
Attractive to tenants
The most important thing, really, is to ensure you achieve excellent rental yields and a good return on your investment. New build properties are likely to have a modern, contemporary design and tend to be finished to a high level, with up-to-the-minute bathrooms and kitchens and chic, elegant décor.
If you buy off-plan, you may even be able to choose your own fixtures and finishes, so the final product isn’t at the behest of the developers.
Modern living is likely to have significant appeal to a large pool of potential tenants, even more so if the new build happens to be located close to a train station or town centre.
New-builds can sometimes be characterised as soulless and hollow, lacking the charm and idiosyncrasies of an older, more traditional home, but with a bit of innovation and invention a new-build home can give off that same homely, cosy vibe.
A new-build home is likely to be more energy efficient than an older one, which could save you and your tenants’ money on utility bills. Tenants, who are paying closer attention to energy nowadays, will also appreciate a home that is more energy efficient, especially if they want to boast about their green credentials.
If your rental home already scores highly on energy efficiency from the start, you won’t have to worry so much about upgrading your property’s energy performance at a later date.
Like anything, investing in new-build homes has its downsides as well – namely delays, disruption, smaller room sizes and possible defects that aren’t picked up by snagging surveys – but it’s definitely something landlords and investors should consider, given the many advantages it has too.
As already noted, yields are something to consider carefully, and the relationship between purchase price and likely rental is critical. It doesn’t always follow that new build status will automatically translate into a higher rental. As always, the key is to get the right advice from letting agents who should be able to look beyond the gloss and estimate rental based on hard facts.
At Letting Solutions we’ll do all we can to help you get the most from your rental properties, whether they’re new-builds or hundreds of years old.
For more info about what we can offer please contact us on 01506 496006. To find out how much you could be charging in rent, check out our instant online valuation tool.