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Investment Property: Should you build or buy?

Ever thought of getting an investment property, owning your own? Well, there are loads of options out there, but would you buy an existing house? Or would you try and build a new one? And if you're going to build a new one, where are you going to get the land?

First, let's look at whether you should build or buy. The government is clearly trying to incentivise people to build new homes to help with the housing shortage. How are they doing this?

Firstly, the interest rates. They are lower if you're building new, some banks have brought out specific mortgages at extremely low rates. If you're building new. This in itself is a major incentive. Also, the L.V.R.'s or Loan to Value Ratios, mean you need less deposit to build new than buy existing. 20% to build, vs 40% to buy existing. What about maintenance? A new build means no hassles with maintenance. If you choose a good builder, you'll get a ten year master builders warranty. But the really big reason from an investment point of view is tax.

Firstly, the bright line rules mean that you can sell your newly bought investment after five years without getting taxed on the profits. An existing home, you'd need to keep for at least ten years to avoid the extra taxes.

The government is also removing tax deductibility on interest. Investors used to be able to claim the interest paid on their rental mortgages as an expense. But the new rules mean that you can no longer do this on an existing home, but it's possible now on a new build.

This in itself will save you thousands every year. So it's pretty obvious new builds are the way to go. But where would you find the land? A lot of our clients have realised they already have the land they need.

You'd be surprised at how we can reconfigure any land you may already own, or if that doesn't work, we should be able to find you something in a great area. If you'd like to explore the possibilities of building a new rental investment, give our expert team a call on 0800 456 321, or have a look at our investor-ready house designs.

what's next?

Let’s get together for a free, no-pressure meeting with one of our team, at your place or ours.

We can't wait to hear your ideas!

Call 0800 456 321