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Why do new builds make good buy-to-let investments?

Feb 16, 2023
Why do new builds make good buy-to-let investments
New build properties have long been popular with first time buyers wanting to get onto the property ladder. But many buy-to-let (BTL) landlords choose to invest in new build properties too. Discover why many property investors are buying new homes with David Wilson Homes, and find out how the BTL buying process differs.

Key Takeaways

1. Tenant Popularity:
  • Shiny, never-lived-in homes are highly sought after by prospective tenants.
  • Landlords can charge premium rents due to tenant demand.
2. Speed of Completion:
  • Buying directly from the housebuilder means no seller chain.
  • New builds can be completed faster, reducing void periods and allowing quicker rental income.
3. Certainty and Security:
  • No risk of sellers changing their minds or getting better offers.
  • Reservation fees protect your offer from being gazumped.
4. Energy Efficiency:
  • New builds meet stricter energy performance regulations.
  • Lower utility bills for tenants due to efficient features.
5. Low Maintenance Costs:
  • Everything is new, minimizing maintenance expenses.
  • NHBC warranty & insurance policy provides peace of mind.

Why new builds make good buy-to-lets 


Popularity with tenants 

New build properties can make brilliant BTL investments. One reason for this is that shiny new homes that have never been lived in before are incredibly popular with prospective tenants. Therefore landlords are able to charge premium rents.

Added to this, it’s likely your property will be snapped up quickly, reducing void periods where your property is unoccupied and not bringing in any rental income. 

Speed of completion

Buying a chain free home means you’re not waiting on the seller to find a new home to move into before you complete. When purchasing a new home there is no seller chain because you’re buying directly from the housebuilder.

It’s estimated having no chain can shave eight weeks off the buying process. With the UK housing market moving fast, this is a considerable advantage of new builds. It means you could be moving tenants into your rental property much sooner and receiving rent.

More certainty 

Around 20% of second-hand home purchases are cancelled. This could be because the sellers simply change their minds, get a better offer, or are scared off by a bad survey report. 

With a new home, these aren’t issues you have to contend with. Firstly, you’re buying directly from the housebuilder, taking the emotion out of the transaction. Plus, reservation fees protect your offer from being gazumped.

Energy efficiency 

New builds are also popular with BTL landlords because of their energy efficiency. A typical rental property must have an EPC rating of band E or better. However, stricter energy performance regulation from 2025 will require all rental properties to have a minimum EPC rating of C.

 

New build homes, including all David Wilson Homes’ properties, have an EPC rating of A or B, meaning that they easily meet this regulation. 

 

Thanks to thermally-efficient insulation, argon-filled double-glazing, efficient kitchen appliances, and showers that reduce the amount of water used, David Wilson Homes’ properties are up to 58% cheaper to run. So, your tenants could expect to save up to £2,600 per year on energy bills another draw for prospective tenants concerned about rising fuel and water costs.

Low maintenance costs 

Maintenance costs on new builds are generally very low. As everything from the roof to the appliances and from the carpets to the light fittings is new, in the first few years, maintenance outgoings should be almost non-existent. 

Added to this, all new homes come with an NHBC warranty & insurance policy.. This means you can rest assured your property meets strict design, materials and workmanship standards. Plus, if anything goes wrong, you’re covered by a 2 year builder warranty period, followed by an 8 year insurance cover.

Compare this, for example, to a Victorian property which could have been built almost 200 years ago, and is likely to be expensive to upkeep and maintain. 

More choice

If you buy off plan, it’s usually possible to request changes to the layout and design of the property. This could mean choosing tenant-friendly finishes such as choosing washable paint and stain resistant flooring. 

Even if buying after the build has completed, you’ll be able to choose the new build that best suits your requirements. You’ll be able to view different style properties on the same development and choose a rental property with the number of bedrooms you desire. 

Looking to invest in a new build BTL property? Browse our new homes in buy-to-let hotspots, Manchester, Bristol and Cambridge.


New build vs Older Property: Buy-to-Let Comparison

 

When considering a buy-to-let investment, one of the key decisions is whether to purchase a new build home or an older property. Both can deliver strong returns, but they differ significantly in cost, maintenance, tenant appeal and long-term performance.

 

The table below highlights the key differences to help make a more informed decision.

Factor
 New build buy-to-let
 Older property buy-to-let
Purchase price Typically higher due to “new build premium” Often lower entry price for similar location
Rental demand
 Strong appeal due to modern design and energy efficiency
 Steady demand, especially in established areas
Maintenance costs
 Lower in early years due to new fixtures and warranties
 Higher and less predictable repair costs
Energy efficiency
 Usually EPC A–B, lower running costs for tenants
 Often EPC D–E unless upgraded
Yield potential
 Can be slightly lower gross yield but more stable
 Potentially higher yield depending on purchase price
Tenant appeal
 High for professionals seeking modern homes
 Strong for families or tenants wanting larger space/character
Initial risk
 Risk of early price adjustment after purchase
 Fewer short-term valuation fluctuations
Service charges
 May apply (especially apartments/estates)
 Rare unless leasehold or managed development

How to choose the right option

 

New build homes are often favoured by investors seeking low maintenance, energy efficiency and predictable running costs, while older properties may appeal to those looking for higher potential yields or value-add opportunities through refurbishment. Ultimately, the best choice depends on location, investment strategy and how hands-on you want to be as a landlord.
 

FAQs

  • Some new build properties, particularly homes on managed developments, may have service charges. Costs vary between developments, so it's important to review before investing.

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