UK New-Build Investment: Choosing Between an Apartment or House

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Is It Better to Purchase a New-Build Apartment or House?

Many experts ascertain that the UK needs new-build properties to help alleviate the current chronic supply and demand imbalance facing the UK’s rental sector.

For that reason, many investors are looking at new builds as potential investment opportunities.

But what type of new-build should you be considering?

Today, we’re looking at the benefits of new-build property investment and helping you decide what type of property is worth looking at.

Read on for more information.

Discover More: See our guide on tax on buy-to-let and how to buy a second property to rent out.

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Should You Buy a New-Build Apartment or House?

Deciding between an apartment and a house for a buy-to-let investment depends on various factors. Apartments typically require less maintenance and offer easier management due to shared amenities and centralised services. They often attract young professionals and urban dwellers seeking convenience and affordability.

New-build apartments and urban flat living also seem to be lucrative investment ventures at the moment. A recent City Residential report showed that rents for apartments in Liverpool rose 10% to 12% in 2023. Meanwhile, A separate Shawbrook Bank study also revealed that 25% of landlords saw urban flats as a lucrative investment due to their desirability, especially towards professionals who want to be close to workplaces in the city centre and surrounding areas.

New-build houses may appeal to families or long-term tenants desiring more space and privacy. Consider your budget, location preferences, target tenant demographics, and long-term investment goals to make an informed decision.

If you are serious about investing in new builds, off-plan investment is potentially one of the best strategies to save money on well-placed properties. This involves buying properties at a discounted price from developers before construction is complete.

The potential for capital growth with off-plan properties can also not be understated. Many off-plan properties – such as The Gateway in Liverpool – are built in areas on the brink of regeneration. As such, those areas are yet to see their full potential as a tenant hub. Eventually, they’ll become popular places to live, which drives price and rental growth.

Find Out More: Looking for a guide to buy-to-let property investment? Check out our pages on the running costs of a buy-to-let and off-plan property developers.

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What Are the Benefits of New Build Investment?

Whether you’re buying a new-build house or apartment, new-build investment properties offer numerous advantages over older properties, including:

Higher Rental Yields

In some cases, new builds usually charge up to 41% higher rent than older properties due to their modern design, updated amenities, and advanced technology.

Tenants gladly pay more for the comfort, convenience, and energy efficiency they offer, along with the allure of being the first occupants. This high demand enables landlords to set competitive rental prices, boosting rental yields. New builds thus present a lucrative opportunity for savvy investors.

Lower Maintenance Costs

New builds, with many components under warranty, require minimal immediate repairs, reducing landlord maintenance costs. Built with durable materials meeting modern standards, they offer hassle-free ownership, allowing investors to focus on revenue generation rather than constant maintenance.

Tenant Appeal

New-build buy-to-let properties attract young professionals and families seeking modern living, especially in growing areas. Their proximity to schools, shops, and transport hubs expands their appeal, broadening the potential tenant pool.

This boosts the chances of securing quality tenants faster, minimising vacancies and ensuring steady rental income.

Energy Efficiency

New builds prioritise energy efficiency, benefiting tenants in two ways:

Firstly, they meet rigorous standards with features like insulation and advanced heating, cutting energy use by up to 20% and reducing utility bills.
Additionally, these homes align with eco-conscious living trends, appealing to those seeking sustainable options amidst growing climate change awareness.

This dual advantage makes new builds more appealing to a broader tenant base.

Property investors favour new builds for their potential for high return on investment (ROI).

With this in mind, buy-to-let investors eyeing solid and long-term returns should seriously consider new-build properties in areas like Liverpool and Manchester. These locations boast high demand and potential for price growth, promising exceptional capital gains and yields for savvy investors.

For more property investment insights, check out some of our useful buy-to-let area guides, such as:

Author

Dale Barham

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