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Our blog examines the strong case in favour of buy-to-let investments in new-build properties across London in 2024. We take a look at the many advantages that investors can benefit from. We will explore the main elements influencing the buy-to-let market, such as increasing rents, lower interest rates, high investor confidence and the benefits of new-build investments.

1 – Higher rents

Rising rents present a compelling case for buy-to-let property investments in London. The city’s growing population is a driving force behind the sustained demand for rental properties, with approximately one-third of households opting for private rentals. This high demand exerts upward pressure on rents across various neighbourhoods, making it a favourable time for property investors.

Moreover, London boasts healthy rental yields, outperforming many other major cities. In prime areas, rental yields typically range from 3-5%, while some new build-to-rent developments can yield over 7%. These attractive returns provide landlords with a steady and passive income stream, enhancing the appeal of buy-to-let investments in the capital.”

2 – Lower Interest Rates

High inflation in the past few years led to rising interest rates, which somewhat dampened the appeal of buy-to-let investments from 2022 to 2023. However, the current trend shows a decline in inflation rates, which is expected to prompt the Bank of England to lower the base rate. Should the Bank of England follow through with its anticipated base rate cut in May, mortgage costs will likely decrease, making buy-to-let investments more attractive.

3 – High Confidence amongst Investors for buy-to-let investments

While the buy-to-let sector has faced its share of challenges in recent years, there are now noticeable indicators of growing confidence within the industry. Research conducted by The Mortgage Lender in January showed that 74% of landlords expressed optimism about their own prospects in the coming year. A significant portion of respondents also displayed optimism regarding the future trajectory of the property market as a whole. Additionally, a survey conducted by mortgage lender Together found that confidence levels were sufficiently high for one-third of respondents to contemplate expanding their property portfolios in 2024

4 – New Build Homes: A Win-Win for Landlords and Tenants Alike

Why Buy-to-Let Investments in New-Build Properties Thrive in 2024 London The Residences at Paddington Green London Swimming pool

Renters in London are becoming more and more interested in new-build homes because of the many advantages these developments provide and the attraction of living in a brand-new home. This trend presents a great opportunity for buy-to-let landlords to invest in properties within new-build developments. Landlords stand to gain in several ways:

  • Faster Occupancy; due to modern facilities
  • Premium Rental Prices; reflecting the desirability of new builds.
  • Longer-term tenancies as tenants are inclined to stay longer in well-maintained, energy-efficient properties.
  • New homes are strategically located in prime areas with excellent transportation links.

Constructed using modern methods, these residences boast energy-efficient systems, resulting in lower utility costs for tenants and minimal maintenance requirements, ensuring a hassle-free experience for both parties.

5 – Buy-To-Let benefits with Off-Plan Investments

Purchasing a rental property while it is still under construction, known as buying off-plan, has several benefits for astute investors. A significant advantage is the provision of a two-year warranty.

Investing off plan gives you a marketing edge when it comes to your property. The property is well-positioned to become the newest and most anticipated listing in the neighbourhood, once it is complete. Our knowledgeable staff is committed to helping you acquire a property that will appeal to the greatest number of potential tenants by including brand-new interiors, contemporary appliances, and cutting-edge amenities.

6 – Easy and low-maintenance investment

Purchasing a brand-new property offers unparalleled convenience and peace of mind, as everything is pristine, well-constructed, and covered by warranty. One of the standout advantages of new-build homes for buy-to-let investments is the long-term reassurance provided by a 10-year structural warranty, such as the NHBC Buildmark warranty. This warranty sets stringent standards for design, materials, and craftsmanship, ensuring the structural integrity of the property for a decade, and offering investors invaluable peace of mind.

Moreover, the inclusion of new white goods, fixtures, and fittings translates to minimal maintenance requirements. This streamlined ownership experience greatly simplifies the process of both owning and letting a property, making new-build homes highly appealing to both first-time buyers and busy landlords alike.

7 – A strong case for buy-to-let investments

A crucial determinant of a robust buy-to-let investment is a healthy rental yield, signifying the annual rental income as a percentage of the property’s value. In London, rental yields are deemed favourable when they range between 4-6%.

Additionally, capital appreciation, or capital growth, plays a vital role in assessing the strength of an investment. This metric measures the increase in value of the buy-to-let property over time, influenced by factors such as supply and demand dynamics, as well as area-specific elements like regeneration initiatives and infrastructure enhancements.

Developers often introduce incentives to attract buy-to-let landlords, among which Rental Guarantee Schemes are noteworthy. These schemes ensure a steady rental yield every month, with some developers even offering a guaranteed 6% yield, providing investors with added financial security and confidence

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