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For UK expat and foreign national investors considering a buy-to-let property investment, one of the earliest and most important decisions is whether to purchase a new-build or an older ‘fixer-upper’. Each option has distinct advantages and drawbacks, depending on the investor’s goals, available capital, and appetite for risk. In this article, Liquid Expat Mortgages explore the pros and cons of both approaches and outline what investors need to consider before committing to either.
Investing in a New Build Buy-to-Let Property.
New-build homes are purpose-built, modern and often energy-efficient but they also come at a premium. Depending on the specific goals and character of the investor, a new-build property can have a lot of advantages. The first and most obvious is the low cost of maintenance and lack of necessary repairs. With brand new fixtures, fittings and appliances, including boilers, maintenance costs are typically minimal in the early years. Snagging lists also give buyers the opportunity to resolve any defects at the builder’s expense. Further, most new build homes come with a 10-year warranty, which offers additional peace of mind for UK expat and foreign national investors.
‘In recent history, tenants have been increasingly drawn to the convenience, layout and modern feel of new builds’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘This is coupled with the energy efficiency of new build properties, which satisfy the latest EPC and building standards. Both of these factors are key selling points in the current rental market and can help landlords secure higher rents and reduce void periods.’
‘However, investing in a new-build property won’t be for everyone. New builds typically come with a higher purchase price and while they might attract better tenants, the initial costs can eat into the return on investment. They also carry a risk of depreciation – especially in saturated areas – as the price can drop once the ‘new’ sheen wears off. It’s important to note that over the duration of a mortgage, the property is still almost guaranteed to appreciate, but it’s still important for investors to be aware of how the price of their property might fluctuate and how that can influence their investment goals.’
Investing in a Fixer-Upper Buy-to-Let Property.
Older or run-down properties often come with more character. But with this character comes more challenges. This has been compounded by incoming legislation, such as new EPC legislation, which will require all rental properties to have an EPC rating of a C or above by 2030. However, with the right strategy, fixer-upper properties can offer excellent returns for UK expat and foreign national buy-to-let investors. Firstly, older properties typically cost less than new builds, with many opportunities for UK expat and foreign national investors to purchase below market value. Because of this, older fixer-upper properties have increased potential for value lift when compared with new build properties. By updating kitchens, bathrooms, décor or layout, UK expat and foreign national investors can significantly boost both rental income and property value.
‘For UK expat and foreign national investors renovating their property, there are numerous green mortgage products available, which offer mortgage discounts and deals to investors who commit to renovating their property to meet EPC standards. This can reduce the relative cost of these renovations. Further, investing in an older property gives UK expat and foreign national investors more choice as there is a greater variety in terms of property types, locations and potential tenant demographics. The mortgage products that are available for standard buy-to-let properties are also usually less restrictive than those for new build properties.’
While the upfront renovation costs of an older property might be off-putting, some upgrades can be relatively affordable. Careful use of quality mortgage products can also help to spread the cost of renovation across a mortgage term, making it more cost-effective to renovate than to buy a new build.
Which Is the Better Buy-to-Let Investment?
‘As always, the answer will depend on the investor’s specific goals, budget, and appetite for risk’ says Stuart Marshall ‘An expert mortgage broker can help to look at key factors and assess the relevant information, but it will be largely up to the investor how they want their investment to look. For investors who want a hands-off, energy efficient property that appeals to modern tenants, a new build might be the right choice. Especially if they’re willing to accept a lower yield in exchange for fewer headaches. However, for investors who are looking to maximise returns on a limited budget, who are comfortable with managing a refurbishment project, a fixer-upper could deliver strong rental yields and capital growth. Portfolio investors will likely benefit from diversifying their portfolio and having a range of new build and refurbished properties.’
For UK expat and foreign national investors who are unsure of what type of property to invest in, a specialist mortgage broker will be invaluable. Whether they’re buying a shiny new development or breathing life into a tired terrace, Liquid Expat Mortgages have years of experience in sourcing competitive buy-to-let mortgage products for UK expat and foreign national investors.
Liquid Expat Mortgages
Suite 4b, Link 665 Business Centre,
Todd Hall Rd,
Haslingden, Rossendale
BB4 5HU
Phone: 0161 871 1216
www.liquidexpatmortgages.com
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+44 161 633 5009
