Buy-to-let investors avoid new builds

According to research by ludlowthompson.com, rents on new build apartments are being pushed down by bulk purchasers, which has meant independent landlords are more reluctant to enter this sector of the market.

Of the buy-to-let investors planning to increase their portfolio in the next six months, only 12 percent said they were prepared to invest in new-build apartments. This figure is down from 26 percent in March this year.

Stephen Ludlow, Director of ludlowthompson, said: “Developers are being forced to make bulk sales by banks who want to recoup their loans, even if it means increasing the discount on offer.

“Bulk purchasers can undercut individual investors on rents and still achieve a profit because they paid far less for the property in the first place.”

“New build flats are often built in huge blocks with other identical units. They are almost a commodity.  With so many similar flats going on the market at once landlords have to compete with each other directly on price in order to fill their property.

“New apartments can lose their premium over second-hand properties within a couple of years of completion, almost like a new car as it leaves the forecourt.  Investors have seen this happen repeatedly over the last few years and are now more cautious about buying new build properties.”

For more information, see the ludlowthompson press release.