When imagining a typical rental property, our minds often paint a picture of older homes. However, there’s a noticeable trend as an increasing number of property investors are opting for new homes when expanding their portfolios. The decision between new builds and traditional rentals carries significant weight. In this month’s blog, we’ll explore the distinct advantages of choosing to invest in new build properties.

New build properties stand out for their contemporary designs and modern amenities that strongly resonate with today’s tenants. These homes often go beyond the conventional, boasting sleek kitchens, open-plan living spaces, and energy-efficient systems. The result is a living experience that promises comfort, functionality, and a touch of luxury—a combination that holds significant appeal for potential renters.

A recent study sheds light on a key insight for landlords seeking to maximise their rental income. Approximately 60% of tenants expressed that the presence of higher-quality fixtures and fittings would influence them to extend their rental duration*. Moreover, an additional 27% signalled their willingness to pay a premium for such features*. This not only underscores the potential for higher rental value when offering a property with upgraded fixtures and fittings but also highlights the market’s demand for well-designed, modern living spaces.

The allure of a new property not only enhances its perceived value but also attracts tenants who are not just seeking shelter but are willing to invest in a premium living experience. Landlords, recognising the significance of these preferences, can leverage the appeal of a comfortable and stylish living space to set higher rental prices. In the dynamic landscape of property investment, understanding and capitalising on these preferences can prove to be a key strategy for boosting overall profit margins.

On average, UK landlords spend £1088.48 each year on maintaining their rental properties, according to Towergate Insurance. Recent research found that building maintenance is the second biggest concern for landlords*, superseded only by the worry of a property continuing to let without void periods.

Low maintenance expenses are a significant advantage when choosing a new build property over a traditional Buy To Let home. The use of modern materials and fresh construction minimises the likelihood of repair issues, offering landlords the benefit of reduced expenses in both time and money.

The focus on energy efficiency in the rental market is on the rise due to the cost-of-living crisis and a growing emphasis on sustainability. Tenants, seeking cost-effective living solutions, are increasingly interested in energy-efficient properties. Meanwhile, landlords are considering potential legislative changes, such as the Renters Reform Bill, which aimed to increase minimum EPC ratings.

Despite the bill being currently shelved, a recent Rightmove study reveals a notable shift in rental property offerings. The proportion of properties with an EPC rating of at least a C has increased by 16% since January 2019, especially those transitioning from the sales market. Conversely, there’s an 11% decrease in properties with ratings of D to G entering the rental market. While the bill has been axed by the current conservative government, there are rumours it may be brought back to parliament following the upcoming election.

This shift highlights the growing importance of energy efficiency. Most new builds incorporate the latest energy-efficient technologies, benefiting both the environment and tenants’ wallets, enhancing a property’s overall appeal in the competitive rental landscape.

New build properties comply with the UK’s latest building codes and safety standards. This ensures tenant safety and reduces the likelihood of unforeseen compliance-related expenses for landlords.

While Buy-to-Let mortgages for new builds aren’t as straightforward as those for older properties, they are available. Securing a mortgage for new builds may involve a more meticulous evaluation than for older properties. Most lenders require evidence of a 10-year NHBC warranty and may exhibit a higher appetite for new build houses compared to flats. Key considerations that can impact a landlord’s ability to secure financing may include:

Lack of Rental History

One such factor is the lack of rental history, which means there’s no established evidence that the property will attract tenants and achieve the desired rental income. Lenders, recognising the significance of a property’s track record, may scrutinise this aspect closely.

Potential Delays in Completion

If the new build property is not yet complete, there is a risk of delays, leaving the landlord unable to generate rental income. Lenders are likely to factor in this possibility, underlining the importance of addressing any potential completion delays. However, one notable benefit of buying a new build is that they are typically chain-free. This means that the absence of a property chain reduces the likelihood of complications and delays often associated with traditional property purchases.

Landlord Experience Matters

Experienced landlords with a successful track record may find it easier to overcome the challenges associated with new build property applications. Lenders may appreciate the landlord’s history of successfully letting properties, contributing to a more favourable evaluation.

The rental market in West Cumbria is thriving, with a 59% increase in demand in 2023 versus 2022. Popular areas among renters include Whitehaven, Egremont, Cockermouth and the surrounding towns and villages that offer attractive bases for those working in the area or commuting to the Lake District.

There is an array of promising new build developments in West Cumbria, such as Saltom Bay Heights, Calluna Grange, and St Patrick’s Vale, each offering unique features and potential for a lucrative investment.

As we continue to share valuable insights on property investment, market trends, and opportunities in West Cumbria, we invite you to stay connected. Be the first to receive our latest updates, exclusive content, and expert tips by subscribing to our Property Investor Email Newsletter.

* Property Academy Home Moving Trends 2023