New-Build Investment Property: Why 2024 Is the Year to Buy

2024 is shaping up to be an ideal year to invest in the UK’s residential new-build market, and as a savvy or new investor, you may be considering this property investment option. Purchasing a new-build investment property means you can charge higher rents—despite requiring less maintenance—making it an excellent means of building a property portfolio. This article offers the information you need to decide whether a newly created investment property is right for you.

Table of Contents

What Is a New-Build Property?

5 Pros of Investing in New-Builds

2 Cons of Investing in New-Builds

3 Top Areas for New-Build Investments in 2024

Is Buying a New-Build a Good Investment in 2024?

What Is a New-Build Property?

A new-build property refers to a residential or commercial building that has recently been constructed and never lived in or occupied before. As a buy-to-let investor, purchasing a new-build investment property means you can charge higher rents than older rental options, as people tend to appreciate these homes' allure and pristine nature.

Baron & Cabot are UK property investment experts who can help you with your new-build property investment journey. Our team of experts can provide you with investment opportunities on the best new-builds while offering the support you need to make a successful investment.

When you choose Baron & Cabot to help you with your new-build property investment, you can benefit from the following:

• Extensive knowledge of the UK property market.
• Access to a wide range of new-build developments for investment.
• Expertise in identifying and sourcing high-quality new-build assets.
• Ongoing support throughout the investment process.

If you’re interested in investing in a new-build buy-to-let, we encourage you to contact us now to learn more about how we can help you achieve your investment goals.

5 Pros of Investing in New-Builds

New-build investment properties offer several advantages over older properties, including:

• Lower Maintenance: New-builds usually come with warranties that cover any issues for the first few years. Components like the roof, windows, and heating system are new, so they’re less prone to repairs or replacement in the short term. This can mean fewer costs and less hassle for you as a landlord/homeowner.
• Higher Rental Yields and Capital Growth: New-builds, especially in up-and-coming UK  investment areas, frequently experience strong price inflation in the first few years after completion. This can translate into higher rents and better capital returns for investors.
• Increased Demand From Tenants: New, modern homes with the latest features and facilities are more desirable to tenants. This additional demand allows landlords to charge a premium on rent. New-builds also usually have a contemporary style that appeals to many tenants.
• Government Incentives: New built properties often come with incentives like the First Home Scheme that offers discounts of up to 30% to 50%. These schemes encourage investment in new homes and can improve investor returns, especially for first-time buyers.
• Often Better Located: Many new-build developments are located in up-and-coming areas with improving infrastructure and facilities. This can help ensure strong future capital growth and demand. (More on this soon!)

New-build investment properties can benefit from capital growth, higher yields, lower maintenance costs, and government incentives. While there are risks to consider with any property investment, new builds deserve serious attention for real estate investors in 2024 and beyond. Check out some of our recent new-build developments across the UK to get started.

2 Cons of Investing in New-Builds

While buy-to-let new-build investment properties offer appealing incentives, there are some potential downsides to consider before purchasing one, including:

• Higher Purchase Price: The initial purchase price of a new building is often higher compared to an older property. Developers frequently charge a premium to recoup construction costs. However, you don’t need to worry about the price when investing with B&C — with just a £5K reservation fee and a 20% down payment, you can own a piece of our developments across the UK.
• Lack of Rental History: Another con is that new-builds often lack a rental history, so determining a suitable asking rent can be challenging. It may take trial and error to find the optimal rent that attracts long-term tenants. However, with the help of professional property management companies, determining a suitable rent for your property is not an issue. Moreover, Baron & Cabot only offers investment opportunities with a proven track record of positive rental demand and growth, so you’re safe when you partner with us.

While new-builds can be an attractive investment option, go in with realistic expectations about the fees, risks, and responsibilities. Conduct thorough due diligence and work with experts to determine if the property has solid fundamentals that will perform well as a long-term investment. With the right property and strategy, new-build investment is a rewarding venture.

3 Top Areas for New-Build Investments in 2024

Here are our top picks for the best new-build property investment area in 2024:

• Manchester
• Birmingham
• Nottingham

1. Manchester

Manchester is not just another city in the UK; it’s a thriving, fast-growing metropolis that has become a hotspot for new-build and off-plan investment properties. As one of the major UK cities, Manchester is home to a vibrant economy, a diverse population and a rich cultural history, making it an attractive place for both renters and investors.

Interest in Manchester property investment has increased in recent years with the establishment of significant regeneration projects, the creation of new neighbourhoods, the expansion of existing ones, and the development of new retail, commercial, and entertainment spaces. This has attracted young professionals, families, and students, increasing the demand for high-quality rental properties.

A recent new-build investment-only property in Manchester is Pavilion Wharf. Located in the heart of Manchester, Pavilion Wharf offers stylish, modern apartments with state-of-the-art facilities. Due for completion in Q4 2024, the development is well-connected to major city centres and located near local businesses, restaurants and bars, making it a popular choice for families and professionals alike.

Other excellent new-build investment opportunities in Manchester include Victoria House and Vidaux.

2. Birmingham

Birmingham, the UK’s second-largest city, is experiencing an exciting phase of growth and development. With a diverse economy, a rich cultural scene, and a young, dynamic population, Birmingham has become a prime location for new-build investment properties. Now is the best time to look into Birmingham property investment opportunities.

Birmingham’s economy is robust, diverse, and home to various industries — from manufacturing and engineering to digital and creative services. This economic vibrancy draws more people to the city, further increasing demand for rental properties.

A new-build development you can key into in Birmingham is Gunsmith House. This project, due for completion in Q1 2024, offers luxury apartments in the heart of Birmingham. With its modern design and high-quality finishes, Gunsmith House is an attractive choice for renters seeking a stylish, convenient living space.

Other Birmingham-situated new-build developments to take advantage of are APEX Lofts Digbteth, Boulevard, and Heaton House, Jewellery Qtr.

3. Nottingham

Nottingham, known for its rich history and vibrant culture, is a city on the rise. As one of the UK’s top ten largest cities, it’s an attractive hub for businesses, students, and families alike — making it a prime location for new-build property investment.

Baron & Cabot presents a unique opportunity to invest in Nottingham's burgeoning new-build property market. Our extensive knowledge and professional expertise allow us to quickly and confidently guide investors through profitable Nottingham property investment opportunities.

Attractive new-build developments in Nottingham include The Muller Yard, due for completion in Q4 2023.

Is Buying a New-Build a Good Investment in 2024?

Without mincing words, a new-build investment property is a great investment option in 2024 and beyond!

However, looking into these three factors is advised when determining if new builds will provide strong returns in the coming year.

• Limited Supply: The UK continues to face a housing shortage, with demand far outpacing supply — an issue experts predict may not be resolved until 2100. New home construction has failed to keep up due to a lack of available land and resources. This limited supply of new builds will likely support price growth and demand from buyers and renters. Remember, scarcity often leads to increased value over time.
• High Demand: Millennials are entering their peak home-buying years, and many prefer new, energy-efficient properties. The desire for sustainable, tech-enabled housing is rising. New-builds cater to these preferences, fueling interest from owner-occupiers and investors alike. This swelling demand suggests new builds may achieve quicker sales and higher rents.
• Government Support: The government aims to spur new home building through incentives like the First Home Scheme and lower developer taxes. These supports reduced costs and risks, encouraging more new home construction. Additional government backing in 2024 and beyond could further catalyse the market.

Three potential factors that may curb price growth for new-builds include:

• Rising Costs: Inflation and supply chain issues may increase building costs, limiting developer profits and triggering price increases.
• Oversupply Risk: An overambitious increase in new home building could outpace demand and lead to an oversupply, slowing price and rent growth. However, there’s no sign this is happening any time soon.
• Interest Rate Impacts: Higher interest rates often reduce buyer demand, which may slow new-build sales and price increases. Rising rates could curb investor interest as well.

All things considered, purchasing a new-build investment property has significant reward potential in 2024 (and beyond) due to limited supply, swelling demand, and government support. However, developers and investors should remain aware of risks like increasing costs, oversupply, and the impact of interest rate hikes to make the most informed decisions. The best way to be safer is to use the service of expert property investors with several years of experience — with the proper research and planning, new-builds are a lucrative investment in the coming year.

Frequently Asked Questions

Are new-build properties a good investment?

Absolutely!

New-build properties can be an excellent investment for several reasons, including:

• Low Maintenance: New buildings are typically equipped with the latest technology and building materials, resulting in lower maintenance costs than older properties that may require significant upkeep or renovations.
• Energy Efficiency: Modern building standards often focus on energy efficiency, which can lead to lower utility bills for occupants. This can be a big selling point for potential renters or buyers.
• Higher Rents: New-builds offer an allure that many renters desire, especially among the younger population. This means investors can charge higher rents than older buildings, generating decent passive income.

So, if you’re considering property investment in the UK, new-builds are worth it — contact us now to get started.

Do new builds increase in value?

Yes, new buildings increase in value, but it’s important to note that several factors influence property value appreciation. These factors include the property’s location, the local real estate market, the economy, and the demand for housing in the area. In any case, real estate should be considered a long-term investment, and the value of a new-build property, like any property, has the potential to increase over time.

Do you need to sell your house before buying a new build?

Whether or not you need to sell your current house before buying a new build largely depends on your circumstances and financial situation.

Here are three aspects to consider before making a decision:

• Financial Considerations: If you need the proceeds from the sale of your existing home to fund the purchase of the new building, then yes, you’ll likely need to sell your current home first. However, if you can afford to juggle two mortgages at once or have other funds to cover the cost of the new build, you may not need to sell first.
• Property Market Conditions: The state of the property market can also influence this decision. In a seller’s market, homes tend to sell quickly, which might allow you to sell your current home and buy a new one fast.
• Timing: New-builds can often have uncertain completion dates, making timing the sale of your current home challenging. Sell too soon, and you might need to find temporary housing until your new home is ready. Sell too late, and you might need more funds available when you need them.

It’s always a good idea to consult with a financial advisor or real estate investment experts to help decide the best action based on your situation.

Conclusion

The new-build investment property market in the UK has bright prospects, especially if you get the location and type of property right. While there are risks to consider—as with any investment—buying at an optimal time and choosing an area with strong growth potential can help mitigate risks and maximise returns over the medium to long term. Contact us now to help you get started!

Disclaimer: Any information provided by Baron & Cabot does not constitute financial advice and is for educational purposes only.