As a buy to let landlord, you'll always be on the lookout for new investment. Apartments, terraced or semi-detached you'll consider every
type of property. Of course, there are things you'll take into account; cost,
location, condition etc. But there's also another choice to make. Do you opt
for a new build or an established property? Landlords tend to look at older
properties but there does seem to be a bit of boom in new housing developments.
So, should you consider a new build when you expand
your property portfolio?
Benefits of new builds for buy to let landlords
There are plenty of reasons why buy to let landlords should
consider new builds. They have many advantages over older housing including:
·
No need to decorate. You’ll appreciate
the neutral tones of a new build. In many new builds’ fittings including
carpets, curtains and other furnishings are included.
·
No repairs. When buying a property, a
landlord will usually have to do some repairs. This adds to the costs
and delays a tenant moving in. Apart from snagging a new build won't need any
work.
·
More energy efficient. New builds will be
fully insulated and have a high EPC rating. You certainly won't have to worry
about your Energy
Performance Certificate.
·
New builds are...new. The boiler will be
new. As will be the plumbing and electrics. No more nightmares wondering if the
boiler will blow up. You don't have to worry.
·
Cheaper to maintain. New property = no or
very low maintenance costs. And expensive repairs shouldn’t be an issue either.
At least not for many years. Most new builds have a 5- or 10-year warranty against
major repairs.
·
Local amenities. Developers usually site
their new estates or complexes near to local amenities. Some developments will
have their own facilities including shops, cafes and a gym. Needless to say, this
will be a big plus point for tenants.
·
Transport links. Developers will usually
ensure their new builds have excellent transport links.
·
You can buy off-plan. As we'll discuss
later this could also be a negative. But buying off-plan can get you a discount
on the price of the property increasing your potential yield immediately.
However, buying off-plan does present some obvious risks.
So, you'll see plenty of potential benefits with new builds
as a buy to let project. But, as with anything, there can be downsides.
Things to think about
Although buying off-plan can net you a discount on the price
of the property, there are a couple of issues to take into account.
Firstly, buying off-plan does present a bit of a risk. Plans
may change. Delays are often inevitable. The developer could have financial
problems. Because of the risk of buying off-plan, a buy-to-let mortgage may be
more difficult to arrange. You may have to find a specialist lender and the
deposit can often be larger than normal too.
Something else to bear in mind with buying a new build off-plan is the time it will take to install a rent-paying tenant. With the deposit
and mortgage payments, you'll have made a significant cash investment before
generating any rental income.
Although we mentioned earlier that a new build is ready to
rent out as soon as you take possession that isn't always the case.
Most, if not all new builds, will inevitably have some
issues. Do a comprehensive survey immediately you get the keys. Make sure the developer actions your snagging
list quickly. Then you can start looking for a tenant.
New build or not? The final questions
When you're considering whether to invest in a new build you
need to look at the same things you would with any other property.
It's still all
about location. We've mentioned most new builds are ideally located. But
not all. You still need to do your due diligence. Especially if you're not
familiar with the area. Are there good transport links? Is there adequate
parking? What about local schools, shops and recreation? A new build has to
tick all the boxes location wise. One of the most important questions to ask
yourself; is the property appropriate for the type of tenant you want to
attract?
Finally, you need to crunch the numbers. No surprises there.
But take into account the purchase price, off-plan discount, time to let the
property and any other expenses. Are you able to ask and get the rent you need
to cover your costs? How long will it take for the rent payments to start
coming in?
In the final analysis, whether new builds are better for buy
to let landlords comes down to the usual question; is the potential yield high
enough to warrant your investment?
DIY landlords, you can find tenants fast by listing your property with
MakeUrMove, the online letting platform bringing landlords and tenants together.
