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3 reasons why new builds make good buy-to-lets

almost 2 years ago
3 reasons why new builds make good buy-to-lets

Property remains a tangible form of investment and with the right support, it offers both short- and long-term prospects. With a raft of changes in the lettings industry ahead, thoughts are turning to the type of property that will make the best future investment.

Lending experts have noted that landlords are increasingly considering new build homes for their next buy-to-let, as they tick so many boxes when it comes to changing regulations. In addition, the new build market is also changing for the better, with more landlord advantages than ever before.

Here are three reasons why buy-to-let and new build can go hand in hand:-

  1.     Ground rent on new builds no longer exists

Leasehold reforms have started to take effect and from 30th June 2022, grounds rents were abolished for newly built properties only. This is beneficial for landlords who prefer to invest in brand new flats and apartments, which are usually subject to a yearly ground rent charge from the freeholder. 

Ground rents are not chargeable to tenants, leaving the landlord to pick up the bill. In some cases, the freeholder has added a clause to the lease that permits ground rents to double every 10 or 15 years, saddling the landlords with increasing running costs. Landlords can now invest in a new build property knowing there is zero ground rent to pay.

  1.     High EPC ratings are almost guaranteed

Landlords are under increasing pressure to maintain and subsequently improve the energy efficiency of their buy-to-let properties via the EPC initiative. Buying a new build home can help landlords meet mandatory energy efficiency requirements with zero effort.  

Analysis from the Department for Levelling Up, Housing & Communities found that between October and December 2021, 84% of new build properties were given an EPC rating of an A or a B. This is a critical aspect considering that all new tenancies by December 2025 will only be legal if there is an EPC rating of at least a C – a standard that will apply to all tenancies by December 2028.

  1.     All-new fixtures, fittings & appliances

Landlords will have one eye on the incoming Decent Homes Standard for the private rental sector, as outlined in the Renters’ Reform Bill. While details have yet to be published, it is expected the age and modernity of features, such as kitchens and bathrooms, may be called into question.

Investing in a new build home offers landlords a shortcut to the highest living standards. Today’s new homes include:  energy efficient appliances that come with warranties, the latest heating systems – which will increasingly be heat pumps – superior levels of insulation and now mandatory electric vehicle charging points. In addition, new build warranties generally spanning 10 years cover structural defects for added peace of mind. 

If you are considering your first or a further buy-to-let investment and would like advice, our team is on hand. We can also provide property management services for a ‘hands off’ approach to investment.

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