Property has often been seen as a solid and long-term investment, especially when interest rates were low. With the average rent increasing by 3.9% in the last year – a buy-to-let property could give you a regular income and a financial future.
New builds offer many benefits over existing properties for buy-to-let investors – they’re modern, attractive to renters and low maintenance. Here, we explore the benefits of a new build and whether they make a good investment.
What is a new build?
New build properties are, as the name suggests, brand new and have never been lived in before. New build property developers often build multiple properties on the same site, in a range of sizes to meet the needs of different buyers.
Developments normally have a strong community as many of the buyers or renters move in around the same time. Demand for developments is driven by factors such as population growth, job opportunities, or local amenities like schools, shopping centres, transport links and local infrastructure.
Types of new builds
Buy-to-let investors can choose to buy property that is ready to go or they can choose to buy off-plan, just like someone choosing a house as their primary residence.
An off-plan purchase is a property that has been brought before the build is complete. As an investor, you get a say in the design of the property, so that it’s perfect for your ideal tenants. A key benefit of buying off-plan is that the value of the property may increase during or after construction, so you could achieve a higher profit on your purchase. Developers will also offer incentives for new builds like cash contribution or deposit paid schemes, which can reduce your costs.
When investing in a new build, you can also choose a home that's already built. The property will be ready to go and because it’s brand new, created to a high standard, and modern – it can generate a lot of interest from renters.
Benefits of investing in a new build
New builds offer investors many benefits over existing properties. Here are a few:
Higher rental yields
Compared to existing properties, new builds can achieve higher rental yields. That's because they are modern, built to a high standard, designed well, brand new and often in an ideal location.
This means you can charge competitive rental prices and potential tenants will be more likely to pay for these added benefits. They also appeal to a range of renters, whether that’s a retired couple looking to downsize, a growing family or young professionals.
Low maintenance and warranty
You can save on costly renovations because the properties are in perfect condition and built with modern construction methods. You won’t have to worry about any repairs or issues like damp, which could be costly to fix in older buildings.
At Miller Homes we offer a 10 year NHBC warranty as standard. This can cover any repairs or defects, or damage to the load-bearing structure. We also complete checks after you purchase the property to ensure it meets your standards and to check for any potential problems.
Regulations
New builds are built to the latest safety standards and regulations. At Miller Homes, we are registered developers under the New Homes Quality Code, so we offer greater protection to buyers and an after-care service. With 90 years of experience under our belt and over 100,000 properties built, your investment is in trusted hands.
Capital appreciation
Investing in a new build means there is a greater chance of capital appreciation and gains. This is because properties are located in areas with high market demand and they are built to a high spec, which makes them attractive to buyers. This is perfect for investors who are looking to increase their wealth, generate a higher income or grow their property portfolio.
Energy efficient
New builds are designed to be energy efficient. They are well insulated, airtight, use energy efficient appliances, doors and windows, and lighting. At Miller Homes, we are committed to sustainable practices. We work with minimal waste, aim to reduce waste going into landfill and increase our recycling. 90% of our electricity is from renewable sources and we are aiming for this to be 100% by the end of 2024.
Energy efficiency is also a plus for your potential tenants. Research shows that the average new build house is 65% more energy efficient than older houses, resulting in household heating, hot water and lighting bill savings of £979 a year.
Is buying a new build a good investment?
New builds are perfect for experienced property investors or if you're looking to make your first property investment.
They are a hassle free option and you have the potential to set competitive rental prices, because they are in high demand. Research shows that rental properties are sought after with each property getting an average of 11 rental inquiries. As a new build property investor, you will likely gain a lot of interest from renters and have a wide pool of potential tenants to choose from.
You can also cut costs with a new build, because you will be less likely to have maintenance issues or costly repairs as you might in an existing property. This will lead to increased satisfaction for the renter and it means your role as a landlord will be effortless.
You can also make a solid return on your investment if you choose to sell the property.
What to consider when investing in a new build
If you are interested in investing in a new build, make sure to do your research.
First, look into the reputation of the new build developer and read any customer testimonials, reviews or ratings. For example, we have achieved a five-year customer satisfaction rating for 12 years in a row and we have 90 years of experience in building properties.
Next, research the location of the property. Is it within close distance to transport links, schools and healthcare? It’s important to factor in what type of tenant you want – if it’s a growing family, they will want access to schools, parks or leisure facilities. You can also check the local area for green spaces, crime rates and any upcoming developments which would increase the property’s value.
Aim to visit the site or property so you can check the quality of the build. You can also talk to the sales team and ask any questions related to the materials used in the construction or any offers or guarantees you will get. It’s best to choose a developer that is registered under the New Homes Quality Code and has a commitment to their customers.
Finally, research the local market. If you are looking to resell in the future, you can work out whether there is a demand for properties in the area and the local property prices. It’s also worth getting specialist advice on a buy-to-let mortgage for a new build.
To view our new build developments or for more information, click here.