Should your next property investment be new?

Are you one of the 34% of landlords looking to expand their property portfolio in 2022? The statistic from Nationwide suggests confidence is building in the buy-to-let sector, with a third of investors looking to acquire additional properties this year.

When it comes to the type of properties that deliver the best rental returns, additional research has revealed the newer the property, the better the yield can be. In fact, rental market data analysed by Unlatch in March 2022 revealed new build homes can achieve rental premiums as high as 41% in the current market. 

As well as tenants who are willing to pay a premium to rent a newer property, more modern buy-to-lets give landlords multiple advantages. The homes don’t even have to be fresh from the housebuilder either – resale houses and flats that have been built in the last few years also bring with them benefits, as we explain.

Something that has moved to the top of both a tenant’s and landlord’s agenda is energy efficiency and this is where newer properties excel. While renters will look for homes that are cheaper to heat and power, as a result of rising fuel bills, landlords should have increasingly strict Minimum Energy Efficiency Standards (MEES) in mind. 

The Government would like all new and renewing tenancies from 2025 (and all existing tenancies from 2028) to have an EPC of at least a C, rising to a minimum of B from 2030.

While many period and 20th century properties would struggle to meet these tougher standards without costly and disruptive eco improvements, newer homes are built to stringent energy efficiency standards which result in excellent EPC ratings from the start.

As well as offering tenants cheaper energy bills, an eco-efficient new home can present landlords with savings at the very start of their property investment journey. Some banks and building societies are offering so-called ‘green’ mortgages’ to those whose property purchase meets pre-set minimum energy efficiency levels.

If the promise of lower interest rates, cashback and larger loans isn’t enough, homes built recently can also reduce a landlord’s maintenance bill. Aspects such as the electrics, central heating, plumbing and drainage should need little to no repair or replacement for many years, while the structure of homes built in the last 10 years may still be covered by a building warranty. Add in all-new kitchens, bathrooms and appliances, and the foundations are laid for a low-maintenance let.

Other perks of newer homes pertain to speed of let. Unlike older properties that may need work before they’re fit for habitation, a new home can present the ‘turn key ready’ proposition that reduces void periods and can command a premium rent among tenants. And if a housebuilder is offering a furniture pack as part of the deal, landlords can extend the appeal of their rental to professional relocators, students and overseas tenants.

Whether you’re attracted to buying off plan in the hope of some capital appreciation during the construction phase, tempted by a housebuilder offering to pay your 3% additional property stamp duty bill, or you’re tracking the rents achieved at a recently built development, maybe your next investment should be more modern. Ask us for a list of newer homes for sale that may make good property investments.