Old vs new build investment Property: Which is better?

Whether you’re an experienced buy-to-let investor or looking to develop a property portfolio for the first time, it’s likely that you’ll be thinking about which type of property to consider purchasing. It can be tricky working out which is best between old vs new: each has its pros and cons, so there’s no strict ‘right or wrong’ answer.

However, depending on the sort of investor you want to be, you may find that buying new homes might work better for you. In other instances, old property might be the more sensible option. To help you make a more informed decision, we’ve put together this detailed overview of old vs new investment property.

Are new builds a good investment?

New builds are often favoured among buy-to-let investors as they are likely to require less maintenance and should be instantly ready for tenants to move in. For many landlords, buying new homes makes perfect sense, as new properties often come with a 10-year warranty that will cover any structural defects. Investors who want to be a little less ‘hands on’ will find great appeal in new property, because everything has already been done.

All fixtures and fittings are brand new, there are no pesky repairs to see to, and all the landlord really needs to do is find tenants to move into the property. And because the brand new appliances and the modern technology in a new-build are usually attractive to tenants, finding tenants is usually easier.

The housing market is incredibly competitive at the moment, and developers generally take into account the proximity to local amenities when planning new projects. This means that most new builds will have good transport links and plenty of facilities like shops and schools nearby.

Of course all these benefits often comes at a price premium, and you'll often pay more £/sqft for a new-build than an older property.

What are the pros and cons of buying an old house?

Pros of buying an old house

Many people - both investors and tenants alike - feel that new homes lack character. On the contrary, old properties - with their period features like sash windows, open fires, wooden beams and high ceilings - tend to have a bit more individuality and spirit.

One of the main advantages of buying an old property is that you can add value to it by renovating. In addition to this, you’ll also be able to access historical data which should give you an indication as to whether the value of the property is likely to rise in the future.

By making an intelligent purchase of an established property, you can expect your investment to outperform national averages over the long term, as well as experiencing high capital appreciation which should benefit your cash flow.

Cons of buying an old house

As a general rule: the older the property, the more likely you are to discover internal issues with things like wiring, and external issues with pointing, brickwork and roofing.

You should also be prepared to inspect fixtures and fittings like the boiler. If a boiler appears to be nearing the end of its life-cycle or hasn’t been replaced in a long time, upgrading the central heating system could prove costly. Wear-and-tear over time means that older properties may require some general TLC. However, renovations can be costly, and you could eat into your potential profits if any major work needs undertaking.

The worst-case scenario with an old property is that you discover a major issue while it is occupied by tenants. This can mean having to lose rental income while your tenants are temporarily relocated, and you may also be liable to contribute costs towards their rehousing.

It’s also worth considering that older properties tend to be much less energy-efficient than new builds. This has a tendency to put tenants off, as it means they will be expected to pay more to heat or power their rented home. If you purchase an old property that doesn’t meet current energy efficiency standards, you can expect to pay a significant sum to upgrade it.

What’s the difference between old houses and new houses?

Modern houses are built with function, practicality and energy efficiency in mind. While floor plans in modern properties are generally smaller than their traditional counterparts, space-saving measures and clever design means that new builds can still appear spacious.

Older properties tend to have a focus on symmetry and tradition and are considered more desirable by some tenants. However, old homes will more often than not require maintenance to ensure they are safe and habitable for tenants to move in. Despite the potential cost of renovating an old home, there is still scope for profit to be made. You can expect to pay significantly less for an old home, as new builds in desirable areas tend to cost around 20% more than older properties within the same location.

Ultimately, there’s no hard and fast rule when it comes to choosing between old vs new build investment property. If you’re happy being hands-on and taking on a ‘fixer-upper’, there is plenty of scope to enjoy a better return on investment in comparison to a brand new property. However, if you simply want to generate rental income without having to go through the rigmarole of renovation, a new build might be the more appropriate choice, and will certainly make for a good first-time buy-to-let purchase.

Over time, there’s no reason why you can’t diversify your property portfolio between old and new build investment property. Regardless of which property type you opt for, it’s important to check whether you’re likely to enjoy a good rental yield to help maximise your returns.

Why not sign up to PropertyData today – our tools can help you make informed decisions on when and where to expand your buy-to-let portfolio.

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Transparent data promise

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How do you know the square footage of properties?

We use proprietary technology to read the square footage of properties from agent floorplans. Although we cannot determine the square footage for all properties, we can usually get sufficient coverage. Agents are sometimes known to inflate square footage, and this should be borne in mind as a weakness of this data.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry.

How often is the data updated?

Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-03-31, although some sales that took place before this date may still be added in the coming months.

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry, and Energy Performance Certificate (EPC) data provided by Ministry of Housing, Communities & Local Government.

How do you know the square footage of properties?

We match the Land Registry data to EPC data provided by the MCHLG. Due to the fact that not all properties sold have had an EPC and vagaries of addressing in the UK, we are not able to determine the square footage of all properties, but we can usually get sufficient coverage.

How often is the data updated?

The private paid data is updated once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month. The energy performance certificate database is updated monthly.

What time period does the data cover?

You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-03-31, although some sales that took place before this date may still be added in the coming months.

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Room let listings on SpareRoom, the UK's biggest room letting website.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from SpareRoom, they are soon removed from this tab.

How is the raw data processed?

Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale.

What is the yield calculation used?

The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from Zoopla, Rightmove or Spareroom, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale. For the SpareRoom data, hypothetical properties consisting of two to six average double rooms with shared bathrooms are used to derived average rent. For all sources, listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What is the yield calculation used?

The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry.

How often is the data updated?

Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

Zoopla Zed-index

What time period does the data cover?

The data covers transactions in the last six years

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

The price paid data shown goes back to January 2015. The listings data is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the calculations used?

Average sales per month are for the last 3 finalised months. Turnover is average sales per month divided by total for sale. Inventory is 100 divided by turnover.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

Where does the raw data come from?

We receive data on the extent and corporate ownership of all land titles in England & Wales from the Land Registry.

How often is the data updated?

The data is updated once per month when released, typically in the first few days of each calendar month.

What time period does the data cover?

This is an ownership snapshot - the data represents ownership as recorded by the Land Registry at the last monthly export.

How is the raw data processed?

No additional processes are applied to this data.

Where does the raw data come from?

We source different expert forecasts Savills, Knight Frank, OBR

How often is the data updated?

The data is updated annually when new forecasts are released, typically towards the beginning of the year.

How is the raw data processed?

We calculate a consensus forecast using a simple mean average.