Why Invest in New Builds? 

Buy to let property has become a hot commodity in 2023,  following record-breaking years in 2020 and 2021. 

Investing in real estate is one of the best ways of generating passive income, allowing investors to earn solid streams of rental income each month whilst also offering an exit strategy in which you can enjoy a huge cash payout further down the line.

Very few investments can offer the impressive capital growth that property offers.

For example, over the last 20 years, Liverpool has seen an average property price growth of over 211%!

It’s also a safe investment.

For instance, take a look at the COVID-19 pandemic.

Despite the UK economy suffering severely in some areas, UK property prices increased at the fastest rate since 2004. In comparison, at the same time, the stock market experienced its worst crash in 2020 since 1987.

Factoring in that the average rental income in the UK as of April 2023 is now at £1,199 per month – up 9.9% compared to 2022, according to HomeLet – and it’s understandable why so many people are thinking of investing. 

But are newly constructed properties the way to go? Let’s find out by looking at the pros and cons of buying a new build investment property in 2023. 

How to Pick the Right New Build Property 

Location 

The first, and perhaps one of the most critical factors you need to consider, is the location. 

Picking the right location is vital in property investment. There are substantial regional variations in the UK in house prices, rental income, rental demand, rental yields, and capital growth potential. 

By picking the right area for rental properties, you’ll be able to maximise your chance of a successful property investment. 

You’ll need to analyse the local market and new build market to do this. You can do this by thinking about a few crucial measurements. 

They are: 

• Affordability. 
• Average rental income. 
• Average rental yields (the return on investment earned from rent every year). 
• Employment opportunities. 
• Transport links/infrastructure. 
• Regeneration potential. 
• Capital growth/house price growth predictions. 

You can read our complete guide to the best places to invest in UK property to learn more about this. 

Where Should You Invest in New Build Properties? 

For our money, the top two locations to buy new build properties in UK 2023 are Liverpool and Manchester. 

Not only do these cities have substantial rental demand and affordable prices over £60k below the UK average, but they also have some of the highest house price growth potential in the UK – an essential measurement for those looking to earn money from selling their properties later down the line. 

Research from Savills has found that the North West has the joint highest predicted capital growth rate in the UK, offering an 11.7% rise in property prices by 2023 – over 10% higher than London. 

Property Type 

Another important factor is to choose what type of property you’re looking to buy. 

The reality is that you can invest in several different strategies by buying new build properties, including commercial real estate, student property investments, city-centre apartments, or family homes. 

Which property type and strategy you choose will likely depend on how much money you can spend and your investment goals. 

For instance, student properties and city centre apartments will be far more affordable than a family home. 

While this will mean less capital growth in the long term, you will enjoy higher rental income and rental yields due to the lower prices. 

The type of investment you choose will also impact the location you pick. For family homes, you’ll likely want to invest in more rural areas or somewhere outside of the city centre. 

For student property, you’ll want to buy properties close to university campuses and will want to consider the student population of a city – you can learn more by checking out our blog on student property investment in 2023. 

And finally, city centre apartments will likely mean you’re targeting young professionals, which means you’ll want to target properties with good transport links nearby. 

Features 

Covid-19 and the the introduction of hybrid working  have dramatically changed what tenants want from their homes in 2023,

According to research from Benham and Reeves, the top three most essential features in a rental property are now high-speed Wi-Fi, access to outdoor space, and nearby green space. 

As such, you’ll want to find properties that meet this criterion to ensure your property generates as much long-term interest as possible. 

The great news is that several new build properties already have these features to meet modern demand, which means you can feel confident knowing your investment will likely generate high interest. 

Top Tips for Buying New Build Properties 

Buy Off Plan for the Best Savings 

To get the most bang for your buck, it’s a good idea to buy new build properties off the plan. 

Off-plan property is a property that’s available for purchase but hasn’t yet been completed. 

While this sounds risky and means that you’ll have to wait for your property to be completed, the trade-off is that you can save thousands on your purchases. 

For instance, here at RWinvest, we specialise in off-plan properties and offer some developments at over 55% below market value. 

You can learn more about why investing in off-plan property is a smart choice by clicking the link. Remember, though, that due diligence is key and you should research developers to ensure they’re reliable. 

Use a Property Investment Company Like RWinvest 

If you’re new to investing, the world of real estate can get complicated, with regulations and processes involved in the buying process. 

To get the most beginner-friendly and straightforward journey possible, or if you want a more accessible experience in general, using a property investment company is a wise choice. 

Using a property investment company can save time searching for property instead of spending hours browsing websites like Rightmove.  

Instead, you can have a quick chat with a specialist who will point you towards the current best opportunities on the market based on your budget and goals. 

Some companies will even offer developer incentives like free furnishing packages and guaranteed rental returns for a set number of years, so you won’t need to worry about void periods. 

By having a point of contact you can trust, you’ll get regular updates on the development process of your new build, which means you can build a good investment portfolio without worrying. 

You can learn more by checking out our blog on what is a property investment company. 

Make Sure Your Property Is Protected By NHBC Warranty 

One of the significant benefits of buying a new build property is that many are protected under the NHBC Warranty. 

This warranty lasts for 10 years and will protect up to a 10% deposit in the time before the property is finished. And for the first two years, the NHBC will help you with any disputes regarding faults with the building work. 

However, not all properties are protected by this warranty, so be sure to check with the developer or investment company to ensure your investment is as protected as possible. 

Are You Ready For a Property Investment? Things to Consider in 2023

While we think making a property investment is a top choice in 2023, it’s only good if you’re ready for it. 

With that in mind, here are some tips and things to keep in mind when deciding to make an investment this year. 

Landlord Responsibilities 

By buying a rental property, you’re likely going to become a landlord. 

But landlords aren’t just there to provide a home and earn rent, with many UK regulations dictating the responsibilities of landlords. 

This can include maintenance work, ensuring all gas and electrical items are safely installed, providing an Energy Performance Certificate, and more. 

If you lack the skills needed to do repairs, you could end up spending thousands. This is important to keep in mind. 

You can check out the full details of your landlord responsibilities on the government website. 

The Cost of Property 

Property can get expensive, with mortgage deposits, stamp duty fees, and legal fees making property expensive to buy. 

In fact, in our blog post, how much money do you need to invest in property, we found that you’ll require around £30k as a minimum to buy a property worth £100k. 

And that’s not even factoring in the maintenance and running costs involved with property investment, which can include ground rent, monthly mortgage payments, and more. 

Remember, too, that you may not always have rent to cover this, as your property could be vacant for months if you’re unable to find a tenant. 

While you can avoid this as much as possible by buying new build properties attractive to tenants, you need to ensure you have a rainy-day fund to cover your expenses if the worst happens. 

You Don’t Need to Invest Near to Your Home 

Most investors opt to buy investment properties near their homes to manage them themselves. 

This can be a mistake, though, if the area you live in has a poor performing housing market. 

As such, don’t be afraid to invest in other cities that have better-performing markets. While you won’t be a hands-on landlord, you can hire a property management company to handle all of your landlord duties. 

This will allow you to have a completely hands-0ff investment – key for those with a full-time job.