SYS-CON MEDIA Authors: Pat Romanski, Gary Arora, Zakia Bouachraoui, Yeshim Deniz, Liz McMillan

Blog Feed Post

Buying a new rental property

Buying a new build to let out?

Despite bad economic conditions, the UK's private rental sector is outperforming many other investments. On the whole, the government is pleased with it, and wants to see more growth.

‘Build to let’ is a term which refers to the building of new developments specifically for buy to let investment rather than owner-occupation. The announcement last year of a £200 million build-to-let fund means that many such developments might be finding their way into the market in the next couple of years.

Many of us will be thinking, then, about buying new build rental properties. But what are the positives and negatives, and how should we go about it?

The pros of buying new build

The pros of buying new build seem clear:

  • The house is… well, new, and so it shouldn’t require any major repairs for at least a couple of years.
  • The property is likely to be a good energy performer, with decent insulation, double glazing and energy efficient systems.
  • The transaction is ‘chain-free’. The seller is a developer who doesn’t need to buy another property themselves, so they’re not going to pull out because their own purchase falls through.
  • The home is a blank canvas. Depending on how early you exchange contracts, you can dictate pretty much anything – bathroom tiles, cupboard doors, doorbell jingle – making it easy to tailor the home to your perfect tenant.

The cons of buying new build

The cons, as you might expect, are less obvious.

  • Lenders’ requirements for new build funding are generally stricter. You might be limited to a particular postcode or development, you might be required to give information on the type of building and construction, and you’ll almost certainly need a larger deposit.
  • The property is ‘on notice’. The developer can’t guarantee when it will be finished, and you’re at the mercy of the building schedule. Completion might not happen until a long while after contracts are exchanged.

New build has two other pretty big problems associated with it:

…it tends to be small

In September 2011, RIBA (the Royal Institution of British Architects) released a report called the Case for Space: the size of England’s new homes. In it, they claimed that the average new property was 8% short of the recommended minimum size.

To clarify, the recommended minimum size is according to the London Housing Design guide. The guide is the only one of its kind in the country, and its recommendations still fall quite short of others in Europe – 50 square metres for a two-person, one bedroom flat, for instance. That will leave your tenants sorely lacking elbow room.

…it tends to be expensive

Remember the kid in school who never opened their new action figures because they’d instantly lose their value? Well, homes (sort of) work the same way.

Simply by virtue of having been lived in, a property loses value. Something called a ‘new build premium’ is added to a new build property in anticipation of that lost value, and it can be hefty. The worst thing about a new build premium is that there is no definite percentage, as there’s no way of saying how much value a home will lose.

Tips for buying new build

I’m not going to sugar-coat it – new build probably isn’t for inexperienced investors, and it definitely isn’t for those without a good amount of capital to invest from the outset.

If you want to invest in a new build property, remember the following:

  • Make sure the property is big enough for your tenants. Ask for measurements and floor plans, and don’t be fooled by the use of undersized furniture in the show-home (yes, this is a common trick!).
  • Be wary that a lot of features you’d expect a property to have are actually optional extras for a new build. This might include bathroom fixtures (toilet paper holders and towel rails), telephone connections, light fittings and even flooring. Find out which essentials will cost you extra.
  • A lot of mortgage offers have an expiry date, often six months after the offer is made. Ask for a ‘longstop date’ before this expiry date – if the mortgage still hasn’t completed before this date, you can withdraw without penalty.
  • ‘Snag’. This means scour the completed house for any small faults, much as you might with an inventory – this could be cracks in the plaster, doors that don’t shut properly, loose fittings, etc. If you aren’t very thorough or observant, take a friend or hire a snagging company (or better yet, ask if the developer does it themselves). Make sure any issues are sorted before completion so you can rent the property out as soon as possible.
  • Make sure that the developer is part of the NHBC (National House-Building Council).

Once you've chosen your new build buy to let property, you'll need a buy to let mortgage! Get a free quote from TurnKey Landlords

More Stories By TurnKey Landlords

Amelia Vargo is an online marketing executive for CT Capital. Amelia writes for Turnkey Mortgages, Turnkey Landlords, TurnKey Bridging, TurnKey Life and Commercial Trust.

Latest Stories
DevOps has long focused on reinventing the SDLC (e.g. with CI/CD, ARA, pipeline automation etc.), while reinvention of IT Ops has lagged. However, new approaches like Site Reliability Engineering, Observability, Containerization, Operations Analytics, and ML/AI are driving a resurgence of IT Ops. In this session our expert panel will focus on how these new ideas are [putting the Ops back in DevOps orbringing modern IT Ops to DevOps].
While a hybrid cloud can ease that transition, designing and deploy that hybrid cloud still offers challenges for organizations concerned about lack of available cloud skillsets within their organization. Managed service providers offer a unique opportunity to fill those gaps and get organizations of all sizes on a hybrid cloud that meets their comfort level, while delivering enhanced benefits for cost, efficiency, agility, mobility, and elasticity.
Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software with the simplicity and reach of the open web. With staff in 10 timezones, Isomorphic provides a global network of services related to our technology, with offerings ranging from turnkey application development to SLA-backed enterprise support. Leadin...
Darktrace is the world's leading AI company for cyber security. Created by mathematicians from the University of Cambridge, Darktrace's Enterprise Immune System is the first non-consumer application of machine learning to work at scale, across all network types, from physical, virtualized, and cloud, through to IoT and industrial control systems. Installed as a self-configuring cyber defense platform, Darktrace continuously learns what is ‘normal' for all devices and users, updating its understa...
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
Concerns about security, downtime and latency, budgets, and general unfamiliarity with cloud technologies continue to create hesitation for many organizations that truly need to be developing a cloud strategy. Hybrid cloud solutions are helping to elevate those concerns by enabling the combination or orchestration of two or more platforms, including on-premise infrastructure, private clouds and/or third-party, public cloud services. This gives organizations more comfort to begin their digital tr...
Most organizations are awash today in data and IT systems, yet they're still struggling mightily to use these invaluable assets to meet the rising demand for new digital solutions and customer experiences that drive innovation and growth. What's lacking are potent and effective ways to rapidly combine together on-premises IT and the numerous commercial clouds that the average organization has in place today into effective new business solutions.
Keeping an application running at scale can be a daunting task. When do you need to add more capacity? Larger databases? Additional servers? These questions get harder as the complexity of your application grows. Microservice based architectures and cloud-based dynamic infrastructures are technologies that help you keep your application running with high availability, even during times of extreme scaling. But real cloud success, at scale, requires much more than a basic lift-and-shift migrati...
David Friend is the co-founder and CEO of Wasabi, the hot cloud storage company that delivers fast, low-cost, and reliable cloud storage. Prior to Wasabi, David co-founded Carbonite, one of the world's leading cloud backup companies. A successful tech entrepreneur for more than 30 years, David got his start at ARP Instruments, a manufacturer of synthesizers for rock bands, where he worked with leading musicians of the day like Stevie Wonder, Pete Townsend of The Who, and Led Zeppelin. David has ...
Darktrace is the world's leading AI company for cyber security. Created by mathematicians from the University of Cambridge, Darktrace's Enterprise Immune System is the first non-consumer application of machine learning to work at scale, across all network types, from physical, virtualized, and cloud, through to IoT and industrial control systems. Installed as a self-configuring cyber defense platform, Darktrace continuously learns what is ‘normal' for all devices and users, updating its understa...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Addteq is a leader in providing business solutions to Enterprise clients. Addteq has been in the business for more than 10 years. Through the use of DevOps automation, Addteq strives on creating innovative solutions to solve business processes. Clients depend on Addteq to modernize the software delivery process by providing Atlassian solutions, create custom add-ons, conduct training, offer hosting, perform DevOps services, and provide overall support services.
Contino is a global technical consultancy that helps highly-regulated enterprises transform faster, modernizing their way of working through DevOps and cloud computing. They focus on building capability and assisting our clients to in-source strategic technology capability so they get to market quickly and build their own innovation engine.
When applications are hosted on servers, they produce immense quantities of logging data. Quality engineers should verify that apps are producing log data that is existent, correct, consumable, and complete. Otherwise, apps in production are not easily monitored, have issues that are difficult to detect, and cannot be corrected quickly. Tom Chavez presents the four steps that quality engineers should include in every test plan for apps that produce log output or other machine data. Learn the ste...
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...