Is buying a new build a good investment?

Are new builds on the block getting you amped up to buy? Or has a period house caught your attention? Both old and new builds have their pros and cons as buy-to-let properties, but is buying a new build a good investment? Let’s take a look at new builds versus old builds. 

What is considered a new build?

Interestingly, a new build property must have been built in the last two years and not been sold before.  In 2022, there were over 204,530 dwellings completed in the UK. 

Leicester is 2023’s top-ranking area for new build properties with Blackpool and London coming in second and third. 

Are new builds worth investing in?

Lately, you will have seen the market pick up with many developments coming to compilation and becoming ready for sale. 

Buying off-plan

The new builds on offer usually give you the option to buy off-plan (before the property has been started). The benefit of buying off-plan means you will more likely pay slightly less as there is an added risk of buying before the development has started. You will also be able to have your say over certain design features. 

Don’t be surprised if you’re choosing fixtures and fittings along with the developers. This is a great perk to buying off-plan. 

New builds are great investments

Normally, you’ll be paying a premium on a completed new build that has just been released to the market. Despite having a larger outlay of funds, you’ll be saving yourself a small fortune on repairs and improvements that could occur with an older build. 

What are the disadvantages of a new build? 

You might face difficulties with getting a mortgage on a new build. It’s harder to get a good mortgage rate because new builds are prone to depreciation mortgage lenders. They will often insist on a higher loan-to-interest rate which means buyers are having to front a higher deposit. 

Damage and depreciation

Whether it be settlement cracks, dodgy craftsmanship or cheap materials, new builds are susceptible to experiencing depreciating effects post-build. 

You should be able to sort these with your developer and professional snagging company but prepare yourself for inevitable snags before you move in. Once you’re in the property be sure to declare any snags within the first seven days. 

Are period homes a good investment?

The quaint English countryside undoubtedly provides the ideal backdrop to some stunning period properties. Even in the UK’s major cities, you’re hard-pushed to not stumble across Georgian brick builds and elegant period properties. However, are they a good investment? 

Repairs and maintenance

While period properties are lovely to look at, they are known for being energy inefficient, prone to dampness and can be restrictive if they are listed. 

Not energy efficient

Most period builds aren’t built with double glazing to conserve energy. Similarly, loft and wall insulation can prove inefficient in older homes. This may be a cause of concern for prospective renters who are looking to keep costs down. 

Considering the cost of living crisis and the harsh winter we experienced last year, more renters are considering energy prices. 

Do period properties hold their value? 

Ultimately, yes! Period and character properties are sure to hold their popularity on the rental market however the costs in between tenants may prove more costly than if you were to rent out a new build. Repairs and maintenance generally tend to cost more due to specialist work being required. 

Do older properties cost more to insure?

Unquestionably, they can. Especially those properties built between 1850-1940 due to structural ageing. You may find that your surveyor finds some surprises that your insurer will want to know about. It’s also a good consideration to think about your insurance when you’re looking at older properties. 

If you’d like to discuss your existing property’s current insurance policy, get in touch with us at CIA Landlords and we’ll talk you through the best options for you and your new or old build. We are specialists in landlord insurance and offer listed buildings insurance for Grade 2 listed properties.