A growing number of property investors are considering the option of a new-build rather than a second-hand home, so what are the advantages?

In the first half of 2023, around a quarter of all new-builds sold in the UK were snapped up by Property investors, according to the latest research from Savills. The same report also revealed a rise in the number of cash buyers entering into the new-build market.

Demand for newly built homes remains strong among a whole range of buyers, though, including those stepping onto the property ladder for the first time who want a low-maintenance first home. This is a draw for Property Investors, too, as well as the tenants who will ultimately rent them.

Savills’ research also reveals that the average achieved value for brand-new properties has “remained steady” at 98.5% of asking price. This shows that correctly priced stock remains a popular option, even taking the current house price fluctuations of the wider market into account.

The key advantages of a new-build

For homeowners, property investors and tenants alike, there are a number of fairly universal benefits to either owning or living in a newly built property, which is why they remain an appealing option to so many buyers.

1. Energy savings: One of the most notable aspects of a new-build is its better-than-average energy efficiency rating compared to the majority of the UK’s housing stock. This can lead to much cheaper bills for the inhabitant, which has become even more beneficial amid soaring energy costs.

Savills’ research reveals that you can save 55% on your annual energy bill by living in a new property, while some lenders even offer cheaper mortgage deals to incentivise greener homes. In its survey, Savills found that 61% of buyers had opted for a new-build because of its better EPC rating and the associated savings on energy bills.

The sustainability features that were particularly appealing in newly built properties included quality insulation, such as loft, cavity wall and double/triple glazing, which was cited by 90% of respondents. Air/ground source heat pump was what made new-builds popular for 54% of people.

Solar panels, which are more likely to appear on a new home than a second-hand one, were popular among 32% of new-build buyers, while electric vehicle charging points were also a top sustainability feature for 32%.

2. Low maintenance/renovation costs

The appeal of investing in a ‘doer-upper’ and carrying out extensive renovation work to boost the property’s value has deteriorated in recent years due to the soaring costs of building and supplies. In Savills’ survey, almost 80% said this was their main incentive for investing in a new-build instead of an older property.

As the agency points out, ONS research shows that the cost of concrete has risen by 14.4% compared with last year, and this is the case with a wide range of building supplies. So although buying a new-build may cost more at the outset, investors must be realistic in weighing up the cost of renovating a property.

New homes also tend to come with a 10-year warranty from the NHBC, which covers a two-year builder warranty period followed by an eight-year insurance cover for specific aspects of the property. This can provide added peace of mind for the owner.

3. Chain-free

A huge draw to investing a new-build is not having a chain, where you are waiting for an existing owner to sell before you can exchange on the property. This can take a lot of the stress out of the purchase, removing the chance of delays caused by other buyers and sellers.

Either the developer or your property investment consultancy, if you are using one, should keep you up-to-date with how construction is going, to give you a clear idea of when your property should complete. This allows the buyer to ensure their mortgage and finances are in place.

In the survey by Savills, 28% of people said that being chain-free was a major benefit of buying a new-build.

If you’re a property investor interested in purchasing a new-build, or a high-spec newly renovated existing property, get in touch to find out how BuyAssociation can help you. You can also browse some of our current and past projects here.