Is buying a new-build property a good investment?

Building on a heritage

For many decades, London’s unique and well-preserved architectural heritage made period conversions the default choice for buy-to-let investors.  As long as there were plenty of charming Victorian mansion flats to go round, new-build properties were regarded as the riskier option. Fast forward to the present day and we can see a marked shift in attitudes asdevelopers have considerably upped their game by combining imaginative designs with cutting-edge interiors and attractive facilities. Housing stock is scarce due to population growth and the UK government is pushing for the construction of over 300,000 homes per year which means that more first-time buyers will be going down the new-build route; but should investors follow suit?

As the London housing market bounces back from the pandemic induced shutdown, new property developments are taking the lead as prices hold steady. No longer confined to riverside enclaves or hilltop vantage points, they can be found throughout London and can vary in size from small boutique developments, to large-scale regeneration areas specifically designed for today’s modern living. So, what are the advantages and are there any pitfalls?

Developer incentives

Property developers tend to be a proactive bunch and realising that investors may need some persuading, they have been quick to offer discounts, furnishing packs and finance options. This is good news for investor/landlords who want to get up and running with minimum fuss and expense. The government have signalled their support for new builds with a clutch of incentives that include Help to Buy and Shared Ownership. Aimed at first time buyers, rather than investors, they nevertheless are effective in keeping the market buoyant and beneficial to all.

Energy efficient

The environmental credentials of new-builds are light years ahead of most period properties. Installing even the most basic of energy saving features into a Georgian terraced home can incur massive costs and delay, whereas items such as solar panels, green roofs and climate cooling systems are routine features in new build properties. Buying new will certainly future-proof your investment as building regulations become more environmentally conscious over the next decade. In fact, in the future, a healthy EPC (Energy Performance Certificate) history might be a bigger selling point than off-street parking.

Minimal maintenance

Beautiful and handsome Victorian conversion garden flats may look like a good investment, but have you considered just how much of a drain on your finances they can be? Renovating the windows alone would be a major project as you would need to stay within planning rules for the area. New developments come with minimum maintenance hassles and usually have a ten year guarantee as standard. Any structural repairs are promptly dealt with by the developer and there’s no waiting around for planning permission and maintenance is pretty low level.

Close to transport

Period properties were constructed at a time when fast transport depended on how well you fed your horse! Today’s planners are building on an established grid of transport zones and town centres. New-builds invariably take into consideration the availability of quick and convenient transport links as no one wants to be much more than half an hour’s commute from their place of work or study.The Elizabeth Line (aka Crossrail) is a game changer and this has already brought many renters to the Capital who are going to see much more convenient travel times.

Ideal for working from home

Many tenants are buying into the new hybrid working paradigm and landlords will have to adapt accordingly. Investing in a new build puts you ahead of the game as their open-plan design provides the space, light and balcony views that is considered essential for home offices. Communal garden space and fibre optic wifi are other built-in features that new builds offer.In some cases off-plan purchases can even be customised to suit.

Chain free

Not having to go through the delay and inconvenience of a property chain is a big incentive for any investor. A landlord who can present a fully furnished apartment with all the modern conveniences in place and ready to go will attract the cream of professional tenants keen to be its first occupants. Only new-builds can provide this.

Any drawbacks?

So, the argument for investing in a new development in London seems to be pretty solid, but as in life, there are some things to consider.  Many will feel that new developments lack the character of period properties, but although they may not have the history, they are far from the soulless boxes that typified late Twentieth Century schemes. In fact, now that certain restrictions have been relaxed, developers have been free to improvise and take inspiration from a wide range of sources. Roof top pools, curved balconies and internal gardens are just some of the eye-catching details that can be found around London. Many period properties occupy large plots of land and therefore have plenty of garden space. While few new developments can compete with this, they make up for it with an array of clever solutions, like access to linear parks, surrounding parkland and ingeniously designed podium gardens.

So far, so good, but seasoned investors want to know that their property will provide a substantial profit should they decide to sell and this is where London scores heavily. Unlike other parts of the UK, prices of new developments have been as equally resilient to changing economic factors as their period counterparts, so as far as London is concerned, the old “Capital Appreciation” argument is dead in the water.

The Georgians, Victorians and Edwardians of London gave us beauty, symmetry and scale, but it is the new developments that will continue to build on this legacy.

A skilled, energetic and discerning workforce needs imaginative and timely solutions to their housing needs. New developments are central to this requirement and the UK government is doing everything in its power to remove anything that slows down the process. Investors who buy into this infrastructural leap forward are bound to be reaping handsome dividends in the near future.

If you thinking of buying or selling a new-build property, get in touch with our London estate agent team or contact our international offices if you are overseas.