Investors favour new-builds for the buy-to-let market

Investing in property comes with a multitude of choices, from location to size and management style - but a question being asked more than ever before is the choice between new builds and fixer-uppers. Is it worth paying more for a turn-key investment?

The appeal of buying a run-down property for a much lower cost, and then renovating to dramatically increase value ahead of letting has been a popular move for various landlords, but does come with some downsides.

Void periods

When purchasing a property that needs serious renovation, it doesn't matter who you know and what connections you have to call in favours to get the works done - there is going to be a void period where these works have to occur, which is time that you're losing income on the property. Depending on the original condition of the property and the extent of the work needed, this can seriously extend your project and mean that you've lost months of rental income whilst preparing the property.

Hidden Surprises

Even with a strong survey, when you start stripping down a renovation property, you risk finding issues you weren't aware of, including damp and mould. These kinds of issues can not only delay your work, resulting in longer void periods, but can also massively increase the price of your renovation, especially if they're extensive. Older properties typically suffer from more issues than new builds, and can be disastrous to your profits.

Why new builds are becoming the preferred choice in the buy-to-let market

Buy-to-let properties are some of the highest-demanded properties on the market, for both investors and renters alike, leading to them being the preferred option for several reasons.

High demand

Buy-to-let properties receive the highest level of demand due to the quality of the product - new builds typically come with the benefit of on-site amenities that will automatically increase the value of the property. With more and more developments coming with a variety of amenities, properties coming to market that don't have these additional facilities are seeing less interaction, as the expectation of renters has gone up massively. Properties that don't have access to these types of facilities are immediately at risk of less interest.

Lower maintenance/repair costs

New build properties tend to have much lower maintenance and repair costs, due to the property being so new. Most older properties will need some form of works, whether it be minor damage from previous tenants or larger-scale work that requires more time and funding, but new builds are much less likely to need any form of maintenance. If you've got purchased from the developer, it's also likely that you'll have a snagging time period to highlight any issues that they will handle for free, saving you the hassle and cost of resolving them yourself.

New build properties have been the favoured option for some time, and there is no indication of this changing. With more and more new developments raising the bar for standard and design as time goes on, it's likely that the weighted favour for new builds will only continue to grow as investors lean toward stronger yields with minimal effort for a turn-key property.