Advice for investing in new builds

builderWe are constantly hearing that the only way for the UK to get out of the current housing crisis is for new properties to be built, which is why a number of construction companies have been funded by the government to start projects nationwide. However, even though there are already properties ready to be bought the large majority will take a few years to build, which means that landlords have a good amount of time to get to grips with new build properties. To help, here are four things every landlord needs to know:

The Issue of Buy-to-Let

At the moment it seems that new builds funded by the government will not be available for buy-to-let use, which means that landlords may not be able to benefit from them. However, a number of landlords associations have claimed that not letting these properties be used as private rented accommodations will only extend the housing crisis as even when new properties are built many people will still be reliant on the private rented sector. As a landlord you should therefore be cautious when it comes to investing in new builds as you could find that you won’t be able to let it in the future. On the other hand it looks probable the government may change their mind, so if you want to make an investment it’s essential you keep up with their decisions!

House Buying Schemes

In order to reduce the amount of pressure on the private rental sector and improve the property market not only are the government creating new builds solely for individual ownership but are also helping more people afford these houses through house buying schemes. NewBuy is just one of these schemes which pays towards the mortgage of a property as long as the buyer provides a 5% deposit. At the moment a large proportion of these schemes only apply to new properties, which means that they are becoming increasingly popular especially with young families. This could mean that older properties may depreciate in value and so landlords need to keep this in mind if planning on expanding their portfolio in the near future.

Investing in a New Build

Not all new builds are reserved solely for individual buyers, and so there are plenty of ways that landlords can benefit from them. However, as new builds are so popular many landlords are often tempted to buy before construction is complete, leaving them unsure of what they are paying for. If this is the case with you it may be an idea to ask the construction company if they have built any similar properties before and go and inspect them before you invest. Most companies will also provide a brochure containing information on the properties; however don’t forget that the pictures will always look better than the real thing!

New Build Rent Prices

As new builds are in such high demand there may be a temptation to charge high rent prices for them, however in the long run you could find this will harm your business. At the moment there is more demand than there are properties, however in the next few years the amount of new builds in the UK will increase rapidly meaning that demand and ultimately rent prices will go down. If you invest in a new build it would be advisable that you charge the same amount of rent as other landlords and build up your reputation as someone that is fair. This means that your tenants will be more likely to stay in your property for an extended period of time, and if you do invest in even more new builds in the future you will find your reputation will go a long way in helping you find new tenants!

New builds are set to be the next big thing in both the property and the rental markets and they are also a great investment for landlords as being brand new there will be less damages that need to be covered by landlord insurance. However, it is essential that you do your research before investing in a new property as if you buy the wrong one you could end up making a loss!

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