Benefits of New Builds Versus Existing Builds

Benefits of New Builds Versus Existing Builds

Posted: September 26, 2019

There are lots of factors to consider when deciding on the types of property to invest in. The location of the property is important, as is the style and character. The state of the property is also essential as the cost of doing upgrade or repair work will eat into your profits.

Whether the property is a new build or an existing home is part of the equation too. Many investors choose existing builds as they are often in prime locations, they can have a character that is appealing, and they can be less costly to buy than new builds.

However, the new Healthy Homes legislation recently introduced has changed the landscape for property investors and landlords. As a result, new builds are set to become an increasingly popular option.

Overview of the New Healthy Homes Standards

The new Healthy Homes Standards, which became law on 1 July 2019, aim to increase the standard of homes in the rental market in New Zealand. This includes ensuring homes have a proper heater, that rented homes can effectively retain heat, and that rented homes are free from damp and moisture.

The highlights of the new standards include:

  • The main living room of the properties you rent must have a fixed heater that can heat the room to 18 degrees Celsius
  • Your properties must have appropriate ceiling and floor insulation
  • There must be adequate ventilation in your rented properties including extractor fans in kitchens and bathrooms
  • You must stop draughts by, for example, blocking gaps under doors or blocking up unused chimneys
  • The gutters and downpipes must be in good condition to ensure water doesn’t get into the houses you rent out

The Problem with Older Properties

As a property investor, you will know that investing in older properties usually requires a commitment to complete upgrade or repair works. You will factor this work into your calculations to ensure you get a good return on investment.

The new Healthy Homes standards now add another element to the mix, however.

The standards are the right approach as it’s important that the quality of rented properties in New Zealand is improved.

That said, you need to make sure your business is viable and continues to deliver an adequate return. Therefore, if older properties make up all or part of your current portfolio, or you are considering making new investments, you can view the new Healthy Homes standards as an opportunity.

The New Build Opportunity

This opportunity is to take a fresh look at your investment strategy with a view to moving away from investing in older properties to instead investing in new builds. This is because new builds are likely to meet the standards set out in the Healthy Homes legislation out of the box.

In other words, when you invest in a new build, you won’t have to do any further work to ensure the house is warm, healthy, and comfortable to live in. The new build may cost you more, but over the medium and long-term, you will get a better return on investment.

You will also reduce the risk of tenants raising disputes with you in relation to the Healthy Homes standards, plus you will improve your reputation as a landlord who not only follows the letter of the law, but the spirit of the law as well.

The publication of the new Healthy Homes legislation requires immediate action. Part of that should be an assessment of your investment strategy with advice from property management professionals like the experts here at Oaks Property Management.