As buyer confidence gains momentum across the UK property market, demand for new-build properties has risen throughout the first quarter of the year.
There are a number of incentives that come with investing in new-build properties as they are becoming one of the most sought-after property types. And recently, demand has picked up pace among homebuyers and property investors.
This is happening as the UK has become increasingly aware of the importance of being as energy efficient as possible, particularly in the homes we buy and live in. And new-builds lead the way as being the most energy efficient homes to run and maintain.
Energy efficient properties have been put onto the priority lists for many investors, tenants and homebuyers particularly due to soaring energy prices and the rise in the cost of living.
Supply and demand of new-builds
Alliance Fund‘s latest quarterly index revealed a rise in buyer appetite for new-builds across Britain’s major cities. During the first quarter of 2023, a fifth of all new-builds listed had gone under offer or sold subject to contract. This is a marginal 0.8% increase on the previous quarter.
When it comes to stock levels, new homes currently make up 7.5% of all available-for-sale stock in the housing market. This level of stock has remained largely static on an annual basis.
Iain Crawford, CEO of Alliance Fund, commented: “Buyers and developers alike have been sitting tight since the final quarter of 2022 following the uncertainty spurred by September’s mini-budget and this has largely contributed to static levels of demand.
“However, 2023 has begun on a far stronger note and it’s clear that market confidence remains high amongst the nation’s buyers. As a result, we expect new-build market activity to continue to gain momentum as the year progresses and as developers push on with their intended plans to deliver stock to the market.”
New-build flats increasingly sought after
The property market as a whole has been stabilising to a more “normal level”. Buyer demand has gained momentum across the board in recent months, but particularly for flats and apartments, according to recent research by Rightmove.
New-build apartments are increasing in popularity as these properties provide the highest energy efficiency credentials. They come with the lowest energy costs, which has become more important for tenants and can make for a more future-proof option for investors.
As standards further improve in the private rented sector, more new homes could come to the market offering cheaper energy bills. Tenants will likely become increasingly drawn to greener homes, which will make them a huge selling point compared to older, less energy efficient properties.
The impact of minimum efficiency standards and green mortgages
There are government proposals currently being considered that would increase the minimum energy performance certificate (EPC) rating required for rental properties. This could mean rental homes must achieve a rating of C by 2025 for new tenancies and 2028 for existing ones.
Recently, The Telegraph reported that the government is set to give landlords until 2028 to meet the new minimum energy efficiency standard for all rental properties. The newspaper also revealed that there could be a cap of £10,000 on energy efficient costs for landlords.
Whenever this legislation takes effect, you need to be prepared to achieve the required rating if you have any rental properties or plan to enter the sector. And investing in energy efficient new-builds now could ensure you don’t have to worry about this.
On top of that, the green mortgage market has taken off. There are a greater range of products for buy-to-let investors featuring cashback offers or more favourable rates for the most energy efficient homes. This provides additional incentives for landlords to invest in new-builds with the highest EPC ratings.
At BuyAssociation, we specialise in new-build property investments across the UK, as well as newly renovated properties with the highest energy efficiency ratings. Get in touch to find out more.
