Why should you invest in a New Build?
Purchasing an investment property is a dream for many Kiwis. A hotly debated topic in property investors’ circles is ‘should I invest in New Builds or existing properties?’
Here are some reasons why you should invest in a New Build home.
Great Home = Great Tennants
A new build home that is warm, dry and quiet are favorable for tennats. Low-maintenance homes where the tenants don’t have to worry about mowing the lawn or looking after the garden are also looked upon favorably.
When you buy a brand-new home you’re protected by implied warranties set out in the building act. The implied warranties apply automatically to all contracts for building work on a residential house, whether written or verbal. Implied warranties cover almost all aspects of building work from compliance with the Building Code to good workmanship and timely completion of building work. These warranties last for 10 years.
Read more about Implied Warranties here.
Exempt From Tax Restrictions
Any homes that received Code Compliance Certificate (CCC) on or after March 27 2020, will be exempt from interest deductibility tax changes. When purchasing a new build home you’ll be able to continue writing off interest costs against any income produced from the property.
Read more about tax restrictions on new builds here.
A new build home will be built to current building codes, which place emphasis on the quality of materials and workmanship. This means that you’re getting a quality, durable product built to last. When investors purchase an existing home one of the biggest unbudgeted costs they face is long-term capital maintenance. Often maintenance like getting the roof redone, the hot water cylinder replaced or the house re-wired are overlooked and can require huge capital outlay.
Less Deposit Required
Under the reserve banks LVR rules, an investor wishing to purchase an existing property would have to front a 40% deposit. When investors are purchasing an investment property they generally need a smaller deposit. Most banks will approve an investor’s mortgage application for a new build with just a 20% deposit.
If you’re interested in viewing one of our homes, get in touch today. We have showhomes in Auckland, Wellington and Christchurch.