As a landlord, you’d already be aware of the ever-changing dynamics of the real estate market. The decision to invest in property can be both exciting and daunting, with several factors to consider.
When delving into the world of real estate investment, one of the first decisions investors must make is whether to opt for resale properties or new builds.
Both avenues present unique advantages and challenges, and understanding these distinctions is pivotal to making informed investment choices.
What is a resale property?
A resale property, also known as a pre-owned property, is a real estate property that has been previously owned and occupied by someone before it is put up for sale again.
These properties are not newly constructed but rather have a history of ownership and may vary in age and condition.
Buyers of resale properties often purchase them from the current owner or through the resale market, as opposed to buying a brand-new property directly from a developer or builder.
Resale properties can include houses, apartments, condominiums, and other types of real estate.
What is a new build property?
A new build property is a property that has been recently constructed and has never been lived in before. New build properties can be houses, apartments, or other types of buildings.
They are typically built to the latest building standards and regulations, which means that they are often more energy-efficient and have better insulation than older properties.
New build properties are often located in new developments, which may have good amenities and be located in desirable areas. However, it is important to keep in mind that new developments in regeneration zones may not have the same established infrastructure as older neighbourhoods.
The Benefits and Challenges of Buying a Resale Property
While looking into purchasing property, it’s important to explore the possibilities of buying a resale vs a new build. There are numerous benefits and challenges to weigh up and decide what is best for you.
Benefits of Buying a Resale Property
- Immediate Availability: Resale properties are ready for occupancy or rental as soon as the purchase is completed, this is in contrast to an off-plan property which you will need to wait to be constructed.
With a resale property, you can take ownership immediately, allowing you to start generating rental income sooner. This can therefore expedite your investment returns and cash flow.
- Historical Value and Established Neighbourhoods: One of the significant advantages of buying a resale property is its historical value.
These properties often come with unique features, architectural styles, and established landscapes that add character and charm.
For tenants, this can translate into a more distinctive and appealing living experience, which may allow you to command higher rents.
Resale properties are often situated in established neighbourhoods with established amenities, schools, and infrastructure, making them attractive to potential tenants or buyers.
- Known Condition: With resale properties, you can assess the property’s condition before making a purchase. This means that you can obtain valuable information from the previous owner’s inspection and maintenance records.
This knowledge can help you understand the property’s history, identify potential issues, and plan for necessary repairs or upgrades.
This transparency can be invaluable for maintaining and enhancing the property’s value over time.
The Challenges of Buying a Resale Property:
- Maintenance and Renovation: Older properties may require more maintenance and renovation work compared to new builds, potentially increasing upfront costs.
- Limited Customisation: Resale properties come as-is, offering limited customisation options. You may need to compromise on specific design preferences.
- Hidden Issues: Older properties may harbour hidden issues that are not immediately apparent, requiring costly repairs or upgrades down the line.
The Benefits and Challenges when Buying a New Build Property
There are numerous benefits and challenges that you should consider when contemplating the purchase of a new build property and these are most notably listed below.
Benefits of Buying a New build Property
- Modern Amenities: New build properties often feature modern amenities, energy-efficient systems, and contemporary designs, appealing to a wide range of tenants or buyers.
Energy-efficient systems, such as heating, ventilation, and air conditioning (HVAC) systems contribute to lower utility bills, making the property even more appealing to cost-conscious individuals.
- Minimal Maintenance: New builds typically require less immediate maintenance, reducing initial expenses and providing a hassle-free experience for investors.
The use of high-quality building materials and finishes can reduce the need for immediate repairs or replacements.
Moreover, the plumbing, electrical, and HVAC systems advance with each year and so you are far less likely to experience issues.
- Warranty Coverage: Many new build properties come with warranties, providing peace of mind against unexpected structural or system issues.
This warranty coverage provides investors with peace of mind, knowing that in the event of unexpected structural or system issues, the cost of repairs or replacements may be covered by the builder or developer.
This can result in significant cost savings and reduced financial risk for investors, especially during the initial years of ownership.
The Challenges of Buying a New build Property:
- Higher Initial Costs: New build properties often come with a premium price tag due to their modern features and amenities.
- Limited Location Options: New build projects are typically located in developing areas, which may lack the established infrastructure and amenities of older neighbourhoods.
- Construction Delays: Delays in construction can postpone your investment returns and rental income, potentially affecting your financial projections.
It’s important to select a developer with a strong track record or use a property investment company like IP Global to get some free advice on markets and developers where there are protections in place.
Additional Tips for Landlords in 2023
Here are some additional tips for landlords when choosing resale or new build properties to buy in the 2023 market:
- Consider your target tenant: What type of tenants do you want to attract? Families? Students? Professionals? Once you know your target tenant, you can look for properties that are located in areas that are attractive to them and that have the features that they are looking for.
- Think about your budget: How much can you afford to spend on a property? Keep in mind that you will also need to factor in the cost of maintenance, repairs, and insurance.
- Do your research: Compare the prices of similar properties in the area to make sure you are getting a good deal. You should also research the neighbourhood to make sure it is a safe place to invest.
- Get pre-approved for a mortgage: This will show sellers that you are a serious buyer and can afford the property.
- Work with a real estate agent or property management company: We, at Complete, can help you to find suitable properties to kick start or grow your property portfolio.
Important Factors When Looking at Property for Sale in the UK Property Market 2023
In addition to the factors listed above, landlords should also consider the following when buying a resale or new build property in 2023:
- Rising interest rates: Interest rates are expected to continue to rise in 2023, which will make it more expensive to borrow money to buy a property.
Landlords should factor this into their budget when deciding how much they can afford to spend on a property.
- Low inventory: Inventory levels are expected to remain low in 2023, which means that there will be fewer properties available to purchase. Landlords should be prepared to act quickly when they find a property that they are interested in.
- High demand: Demand for housing is expected to remain high in 2023, as seen in the Zoopla UK Rental Market Report – September 2023 which means that landlords should be able to command high rents for their properties. However, landlords should also be prepared for increased competition from other landlords.
By carefully considering all these factors, landlords can make a wise investment in a resale property in 2023.
The choice between resale and new build properties hinges on your investment objectives, risk tolerance, and budget.
Resale properties offer immediate availability and established neighbourhoods but may require more maintenance.
On the other hand, new builds provide modern amenities and minimal maintenance but may come with a higher upfront cost.
A well-informed decision, guided by your investment goals, will help you navigate the nuanced terrain of real estate investment successfully.
While 2023 raises challenges like rising interest rates, low inventory, and high demand may be present, landlords can navigate the market successfully by staying informed, doing thorough research, and working with industry professionals, such as IP Global.
Ultimately, both the resale and new build property markets continue to hold promise for landlords seeking to build and expand their property portfolios. Contact us now to discover your opportunities as a landlord to boost your property portfolio through resale and new-build property investment.