As a buy-to-let landlord, you’ve likely encountered this conundrum already. Is buying a new build a good option, or are older homes built better?
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Buying a new build and buying off plan for buy-to-let
What are the pros of buying a new build and buying off plan?
New build homes won’t require you to undertake much work before you look for tenants, because they usually come with modern kitchens and bathrooms, appliances, new floor and window coverings, and they’re freshly painted and decorated. Tenants will perceive the home to be of high quality, and new builds often come with a 10-year warranty from the developer that covers defects.
New build homes are built to provide convenience for residents, so they’re usually close to local amenities and have good transport links. If the new build is part of a purpose built residential block or complex, conveniences such as parking, shops and even gyms may be part of that block or complex. This only increases the home’s appeal to tenants.
Typically new build homes are built in areas that see strong demand for homes, making it easier to find tenants quickly.
And, if you’re buying off-plan, you could be first in line to purchase a property so may be able to negotiate on price. The developer might give you the opportunity to customise fixtures and fittings so they suit what you think your prospective tenants will enjoy.
What are the cons of buying a new build and buying off plan?
If you’re buying off plan, you need to be patient before you see a return on your investment, as the home needs to be built before any tenant can move in.
There are questions to ask when buying a new build house or home, including whether it’s registered with the relevant authorities, whether it’s freehold and even what’s included in the sale (what’s included with a new build can vary, so it’s best to ask the developer. You may be able to negotiate for items to be included).
While buying a new build house or home means that everything is fresh and modern for tenants, there can be initial niggles that cause them headaches. These problems may be basic and easily overcome, but they can add up and subsequently mean tenants are less likely to stay in the home for the long-term.
Finally, with new build homes, when everything is fresh and new, there isn’t much opportunity for you to add value to the property.
Buying an older home for buy-to-let
What are the pros of buying an older home?
Are older homes built better? Some have stood for decades, which might be the answer to that question. Naturally, new builds haven’t had the time to prove themselves.
A new home can sometimes lack personality, with some tenants preferring the character of an older home. Older homes might have unique features and configurations that contribute to a homelier feel. You could find that popular features, such as sash windows, wooden beams and open fires, light up the faces of many prospective tenants.
You can renovate old homes, adding value to the property. Older homes can be more spacious, which is good for prospective tenants, and good for you if you ever want to convert the property into a multiple occupancy (you may need a license and will need to seek planning permission to do this, though).
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You’ll also have access to historical data for the property and the area, meaning you can see how its value has changed over time. This can make you more informed when negotiating a fair price.
What are the cons of buying an older home?
It can be difficult to see what problems an older home has. Because they’re older, they can have internal problems with wiring and walls, and external problems with the pointing and roof condition. You’ll need to check an old property thoroughly and draft in experts to survey it. Things to check include the boiler, which may be old and expensive to replace.
Older homes might need repairs due to wear and tear before tenants move in, and they may be more likely to need repairs for the same reason, whilst your tenants are in the property. However, repairs could be turned into an opportunity to renovate and increase the value of the property, although the disadvantage here is that tenants may need to vacate.
Older homes might not be energy efficient, with tenants potentially being put off by a low EPC (energy performance certificate) rating. With the new minimum energy efficiency standard regulations starting in April, work to improve the energy efficiency of an older home might prove costly.
Which should you choose for your buy-to-let investment?
New build homes and older properties both pose their own unique challenges for buy-to-let landlords. As a buy-to-let landlord, there is no right or wrong answer here and you should go with what feels right to you. Check what lets well in your area and get all the information you can to help you come to an informed decision.
Do you prefer a new build home or an older property as a buy-to-let landlord? Let us know in the comments below.