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Maximising Profit Through Renovation vs New-Build Investment

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    How Do Renovated Properties Compare to New Builds for Investors?

    It’s easy to see why newly built and refurbished properties are so sought after.

    From the owner’s side, having a sparkling new property means no upgrades are needed, maintenance costs are lower, and the unit can be let out immediately. To a tenant, these properties can provide them with immaculate and contemporary living spaces, better energy efficiency, and superior amenities. This outcome can be achieved with a ground-up new build development or a total refurbishment of an existing property.

    However, with some differences between these two property strategies, which is the best investment?

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      Longer or Shorter Construction Phase?

      From an investor’s point of view, one of the most significant drawbacks of ground-up development is the time it takes to complete construction fully.

      Any new build development is a massive project, with many time-consuming stages of construction, such as designing the whole property, obtaining planning permission, finding the right workforce, and sourcing the suitable materials. This means it will take a long time to ensure the build is completed to the highest quality.

      Ground-up development projects are also more susceptible to delays due to weather, as a significant portion of the construction process will occur outside.

      In contrast, a complete renovation or refurbishment takes a much shorter time, and the result can be just as high quality and contemporary as a new build. As the work will take place inside, renovations generally avoid weather-based delays. This means those who invest in such a project off-plan can enjoy their finished property and start seeing returns much quicker than if they invest in a completely new development.

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      Retain Architectural Heritage or Push Boundaries?

      New build developments can greatly modernise a cityscape with their stunning, modern exteriors. Some risk-taking developers even go for innovative and artistic architectural styles, adding something entirely different to the local property scene.

      But there’s also something to be said about preserving the traditional character of a city or town by retaining old buildings. An interior can be completely renovated to the standard and high specifications of a new build while still conserving and celebrating the original features of a property.

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        What Are the Environmental Benefits?

        One of the significant advantages of new-build properties is that they typically have superior energy efficiency compared to older buildings.

        Of course, an older property can be retrofitted with more energy-efficient features during its refurbishment. However, when it comes to listed buildings, this can be more difficult due to legal restrictions on changes the owner of the property can make.

        However, considering the carbon emissions usually involved in ambitious projects such as brand-new, ground-up developments is also worth considering. These projects often cause large amounts of emissions by extracting materials, transport, construction, etc.

        In this case, there are environmental benefits to renovating an older property, as less materials will be used. According to Aecom, it has been estimated that the carbon footprint of a renovated building is about half of that of a new-build during its construction.

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          Case Study in Location: The Mercantile vs The Gateway

          Based in Liverpool City Centre, The Mercantile and The Gateway are two of the city’s most exciting property projects currently in the pipeline. These properties have prime locations, and their contrasting statuses as a new build and renovation have played to different strengths in the targeted areas.

          First, The Gateway development in Liverpool is a ground-up, completely new building on a site strategically located to attract young professional renters. It’s situated beside Liverpool’s business district and the north Liverpool docks undergoing massive regeneration and a cultural renaissance. This area is becoming increasingly popular as a destination for new-build apartments in Liverpool. By targeting this regeneration area, the developers have secured a large plot of land for this ambitious project, with the local media already highlighting the Gateway as a development set to change the face of the city.

          On the other hand, The Mercantile is a total renovation of an existing property, and one of the benefits of choosing this route is the central location. The site is nestled in the Ropewalks district, one of Liverpool’s central hubs. As the area is currently so built up, there isn’t much space to construct an entirely new building. Through The Mercantile’s refurbishment, tenants and owners can enjoy a modern interior with the exact high-quality specifications as a new build, such as The Gateway, but right in the heart of Liverpool City Centre.

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          Full Renovation or Ground-Up New Build Development?

          When it comes to buy-to-let property in Liverpool, both renovations and new builds have their advantages, and the end result will be a high-quality, in-demand property ready to be tenanted.

          New builds are completely flexible when it comes to the developer’s vision, and impressive architectural feats like The Gateway’s towers can be achieved. By constructing a totally new building, the most cutting-edge energy-efficient features can also be installed.

          Renovated properties will be completed much quicker and are usually less likely to be subjected to delays due to weather. Developers will always target popular locations, but refurbishing an old property makes it easier to secure a very central site like The Mercantile’s.

          Ultimately, the choice is for the individual investor who can choose the type of property project that suits their personal goals.

          To learn more about the UK property market, take a look at our buy-to-let area guides, which cover topics such as buy-to-let property in Scarborough and investment property available in Carlisle.

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          Jessica Ferris

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          Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.