Property investors gain numerous benefits from investing in new-build properties, and there could be more incentives on the way.

Energy efficiency is perhaps one of the most talked about elements of the housing market at the moment, alongside the equally topical supply issues and house price speculation. It is something that property investors and landlords cannot afford to ignore when making purchase decisions in the current market.

New-builds tend to come with the highest energy efficiency ratings, which is an obvious advantage for both the environmental benefits and the cheaper energy bills that come with it. For those operating in the buy-to-let market, top energy efficiency is a must-have.

In the government’s latest autumn Budget, Chancellor Jeremy Hunt vowed that measures would be put in place to reduce the country’s energy consumption by 15% by 2030. He pledged to set up a task force as well as increase government spending in order to hit this target.

This is on the back of the existing goal of achieving net-zero by 2050 in the UK, and it is widely acknowledged that the country’s housing market is going to be a key contributor in achieving this.

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Making new-builds even more appealing

Many property investors and landlords will be weighing up whether investing in a new-build is the best option for them. Of course, the initial cost can be higher, with potentially slower capital appreciation over the short-term.

Yet for those who invest with a long-term outcome in mind, and especially for investors who buy off-plan to ensure a cheaper price and maximum gains, there are many advantages.

  • Energy bills are cheaper, which makes new-builds highly attractive to tenants who are more aware than ever of their regular outgoings. One recent study by Savills revealed new-build inhabitants could save an average £4,900 on energy bills over five years.
  • Minimal maintenance and repair costs: Buying a brand-new property means landlords can rest assured that they will have very little to spend on the property in the coming years, aside from some potential wear and tear repairs from tenants.
  • Numerous incentives already exist, including special offers from developers, as well as green finance options which are increasingly becoming available to those seeking a mortgage for an energy-efficient property.
  • Compared with buying an older home, investing in a new-build means there is no upward chain, which reduces complications and stress for the buyer.

On the back of the recent budget statement, Timothy Douglas, head of policy and campaigns for Propertymark, believes the government now needs to offer “real incentives” for buyers of energy efficient homes if it wants to achieve its emissions targets.

He also states that there should be a higher level of promotion of the benefits of new-build and energy efficient properties, as some buyers may not even consider it as an option.

“It’s good to see the UK Government have listened to what we have been saying for some time that improving the poor energy efficiency of homes and businesses is the most effective way of reducing householders’ bills and cut carbon emissions from millions of homes and buildings,” he commented.

“Existing funding schemes have been poorly targeted so this additional spending pledged by the Chancellor needs to offer real incentives for homeowners and landlords to invest in measures that work for their property, and are not based on the idea that one-size-fits-all.

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New-builds are more future-proof

At present, all properties in the private rented sector must achieve a minimum energy performance certificate (EPC) rating of E in order to be legally let out, which already rules out many existing older homes.

There are ongoing discussions on this being minimum standard raised in the future, with the most likely outcome currently being touted that buy-to-let properties will have to achieve an EPC rating of C or above for new tenancies from 2025. At present, thousands of homes in the sector fall short of this, so there is a lot of work to be done to achieve this target.

Therefore, property investors looking to save themselves a headache in the years to come, by having to invest to upgrade older properties to improve their EPC ratings, are increasingly likely to look to the new-build market as a more future-proof option.