The National Property Showcase event is taking place today. Here is the 2nd of our live blog reports: ‘Brand New Homes – Perfect for Buy to Let’ – Owen McLaughlin, Area Director, Countrywide Land & New Homes.
Why Brand New Homes?
If you want to invest in buy to let but you have little time or money to spend on renovation, purchasing a new build property is the ideal solution. Not only do they offer a higher specification than “second hand” homes, with top quality white goods, fixtures and fittings, they are also eco-friendly with better insulation, innovative heating systems and double glazing. Such properties are often up to four times more energy efficient and on average generate 60% lower CO2 emissions. Many of these factors are important to the generations most likely to rent in the current climate, not just from an economical perspective but also in terms of reduced running costs. New build properties are also often safer from an electrical, plumbing and fire proofing perspective and can have more advanced security.
In terms of the benefits to the investor, new build properties are quick and easy to buy, there are no chains, no survey problems, and no legal issues. Furthermore, they are often situated in key locations which are likely to be attractive to would-be tenants. Built as communities, they are close to shops, schools, places of work, transport, and public open spaces. The properties themselves are designed for the needs of modern life where space is efficient & effective. Indeed, according to smartnewhomes.com 17% of space in older homes is unused*
Are Flats Better than Houses?
The most important factor when choosing a new build property for buy to let investment is to not let emotion cloud your judgment. You should never base your purchase decision on a property you would like to live in. Understand your market. You need to be sure that the property meets rental market demands and you will only get this on a regional basis by doing your research and talking to the lettings experts.
Often flats prove to be the more flexible investment option. Flats have fewer maintenance needs, e.g. gardens. They also have planned maintenance programmes, communal cleaning and gardening, better security during void periods, and secure parking is often available.
How many bedrooms & bathrooms?
When deciding what size of property to go for the golden rule is to opt for a property with two or more bedrooms because it offers greater flexibility. The most flexible option for apartments or flats is two bedrooms, for houses the answer is three. Wherever possible you should opt for properties with extra bathrooms, again this improves the flexibility of your rental structure opening up the tenant base to multiple corporate tenants and sharers as well as couples and families
The most important aspect is to always think about your target market. Consider your ideal tenant and evaluate what they would need. It is also important to consider what property type or tenant type will generate the highest return.
If you are unsure about what type of tenant to target, ask a prominent letting agent for advice on on tennant demand in the key locations you are considering.
Large Development or Exclusive Scheme?
Before making a choice on a large development or exclusive scheme you need to consider your target market. What does the tenant want? How much are they willing to pay for it? It’s all about location, location, location! Generally high quality addresses are better for long term capital growth however pioneering developments sometimes return quicker gains – e.g. new towns. Remember not to buy what you would like to live in. This is a business transaction and you should always keep your target tenant in mind.
Maintenance & Warranties
Most developers have warranty schemes, these typically run from two to five years and often include 24 hour/365 day emergency call-out. Inclusions usually protect against all “tenant emergencies”: boiler breakdown, heating failure, showers, kitchen white goods, etc. This is something that second hand homes don’t offer. Most new homes protected by NHBC 10-year “Buildmark” warranty. The NHBC provides cover on over 80% of UK new homes UK and currently protects approx. 1.6 million homes. Many mortgage lenders only lend on properties with NHBC cover – “Buildmark” recognised and trusted by all. If buying newbuild you should always ensure it is covered by the NHBC.
Generating an income from buy to let property isn’t just about rental income/yields. There are no guarantees, however, if you chose the right location, close to employment, amenities, and transport and ensure you get a good deal from a developer when you buy, long term, capital appreciation is a real and genuine possiblity.
In summary, investments in property bring steady return and long term capital growth that outstrip any cash investment. New Homes are easy and cheap to run and it is wise to target properties with two or more bedrooms and a garage or parking space. However, the demographic of would-be renters varies dramatically with location so anyone considering buy to let investment should always seek advice from lettings experts and follow the demand by buying in prominent locations.
If you are considering a new build buy to let purchase take a look at these new homes below:
A First Floor Two Bedroom Penthouse Apartment in the popular Harborne Central Development, benefiting from Fitted Kitchen, Semi Circular Lounge, Both Bedrooms with En suite facilities and allocated underground car parking space.
Close to local amenities this is great apartment with views of the sea. Being a renovated property gives this home a bit of quirkiness to it yet it still retains the modern low maintenance look. With two double bedrooms both with double French doors off and a loft style living room with balcony and views this property would prove very attractive to tenants!