If you have been looking to invest in property, there are a number of avenues you can choose to explore, and one of the most straightforward routes is to buy property in new housing developments as a buy-to-let investment.
In Q3 the number of new homes built was up 50% on Q2 as developers resumed building after the initial lockdown. Thankfully, even with the latest new lockdown Tier system, the building and construction industry is able to continue work and people are able to move home.
In the Chichester area alone, there is a good choice of new developments offering a variety of housing options including Madgwick Park, Shopwyke Lakes and Minerva Heights. The buy-to-let market is a popular choice for many investors, and new homes are often seen as a very good buy-to-let investment – but what are the reasons for this?
Reduced Stamp Duty
At present, new property developments are offering a wide range of good incentives – including reduced stamp duty feesuntil the end of March 2021. This is the tax charged by the Government when you buy a home, and if you are buying a property as a home or as an investment, these fees are currently reduced.
Many new housing developments are even offering to pay this tax or may be able to contribute towards your Stamp Duty, saving you a significant amount of money when investing in these new home properties. Other incentives include lower deposits and fast 28-day exchanges facilitating a completion before the stamp duty holiday ends on March 31st 2021.
Over the last 12 months, the industry has seen much stricter legislation around EPCs and energy efficiency, as well as electrical standards and MEES ratings for landlords. When purchasing an older property for buy-to-let purposes, this could prove costly in the long-run. The property rating now needs to be at a minimum of E, so any landlords in England and Wales with properties rated F and G could potentially face a fine of up to £5,000.
However, with a new build, these properties tend to be more energy-efficient from the outset and are therefore cheaper to maintain. According to Energy Performance Certificate data, more than 8 out of 10 new builds have the top A or B rating for energy efficiency compared to just 2.2% of existing properties.
This year, the demand for rental properties – especially in the countryside – has grown considerably. Many people who are looking to move further out of the city often want to rent initially, as this will give them the opportunity to get to know the area, before committing long-term to a new home. By purchasing a new build for buy-to-let purposes, you can quickly make a return on your investment, as the rental demand for this type of property is always going to be there but may be significantly less expensive than an older property.
There will be none of the problems you experience with older houses, such as out-of-date electrics, plumbing, the boiler, bathrooms, kitchens and decoration. A Chichester property example; a 2 bedroom house on a central Chichester street like Cavendish St can sell for up to £350k and the rental yield potential is between £850-1100 pcm – on new developments it is possible to buy a similar size 2-year-old property for under £300k and let it for £950 a month. You can achieve the same rental income each month, but without the hassle of ensuring that an older property is meeting all the latest government legislation.
Competitive mortgage rates
As well as the incentives we have already touched upon, it is now a shrewd time to invest in buy-to-let properties by capitalising on a weaker market. Across the country, property prices are now slowing after a summer surge and although some individual investors are walking away from buy-to-let, the prospects are beginning to improve. There are now more choices available for people who want to become a landlord and are looking to borrow to invest. The mortgage rates available are becoming more competitive, which is a great incentive for anyone wanting to get a foot on the buy-to-let property ladder.
Would you like to speak to a professional letting agent?
If you want to take advantage of the increasing numbers of tenants looking for a new property in West Sussex, the team at Hancock and Partners we will be able to help advise you on finding the best new development properties in the area to purchase. To speak to a member of our team, please call us on 01243 531111, and we would be happy to assist you.