New-build focus: choosing a location and property type

 

Investing in a new-build, whether as an owner-occupier or as a property investor, has numerous benefits, but getting the most out of your purchase depends on several factors…

New-build properties are designed for modern-day living, meeting all the needs of either the owners or tenants who live in them. Having brand-new décor, fixtures and fittings is hugely appealing, and many are also equipped with smart home technology as an added selling point.

What’s more, the energy efficiency of new-builds far surpasses that of the majority of existing properties. For homeowners, this means not only a more environmentally friendly way to live, but lower energy bills, which will be a big saving over time.

For landlords, energy efficiency has never been more of a selling point to today’s eco-conscious tenants, who will also be attracted by the prospect of cheaper bills. What’s more, the government’s upcoming tightening on minimum EPC ratings for rental properties means landlords and property investors can save themselves a headache down the line.

New-build by location

Manchester is one of the key areas in the UK with a high proportion of new-build homes under construction. The ever-expanding city, which is also home to some major regeneration projects that will continue to boost its appeal as an investment hotspot, has been highlighted as a new-build hub in a recent report.

The research, by MyJobQuote, shows that Salford in particular has the highest number of new-builds registered in the past five years, with 8,533 built. This makes up 6.9% of the area’s total housing stock.

But property type when considering a new-build is also important. In the UK’s key cities, a huge number of tenants are looking for flats, where they can live centrally and get more for their money. Property investors will find that in London, for example, 94% of all new-builds are flats, according to data from Unlatch.

Manchester has the second highest proportion of new-build flats, with the property type making up 90% of stock. Semi-detached and terraced are 5% each, while detached makes up 1% and bungalows make up 0.1%.

Birmingham is next on the Unlatch list with the highest percentage of new-build flats, at 84%. Again, this is a key city when it comes to huge – and growing – tenant demand, with a huge surge in city centre living as the city continues to benefit from ongoing regeneration and a growing jobs market.

Next is Liverpool, where new-build flats make up 82% of all the newly built homes in the city.

Why property type is important to investors

For property investors, choosing the right property type to suit their investment goals is crucial. Identifying a target tenant in a particular location means you can buy a property directly to suit that tenant, as well as one that will achieve the best long-term returns.

Looking at the new-build market can be a good starting point, as developers will generally be building the property type that achieves the highest levels of demand and interest in that area.

For example, according to Unlatch, 55% of new-builds in Sunderland are detached, compared to just 5% for flats. This indicates that there is strong demand for detached homes in the area, so while you may be successful buying a flat, it might need to stand out from the crowd to engage prospective tenants.

Lee Martin, head of UK for Unlatch, says: “The creation of any new-build developments will always focus on a number of factors including lifestyle, available space and of course profit margins.”

“This is a fine balancing act but more often than not flats, detached and semi-detached homes will be the flavour of choice. In many built-up major cities where space is tight, flats tend to dominate as building upwards rather than outwards allows more homes to be delivered to market.”

BuyAssociation has a range of property investment types across some of the key investment hotspots in the UK. Get in touch for more information or browse some of our current opportunities

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New-build focus: choosing a location and property type

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