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Buy To Let Mortgages For New Build Properties

Updated: Apr 20, 2023

New builds can be an attractive proposition for investors who are not interested in renovating a property or has little time to deal with the ongoing maintenance that comes with managing a property.

There are many advantages and disadvantages when looking at new build properties, a few of which we will touch on in this article.

We Cover The Following Topics:

Are Buy To Let Mortgages on New Build Properties Possible?

They are definitely possible, however, applications are checked more thoroughly by lenders due to the higher risk involved.

For example:

  • There is no firm guarantee that the rent will be achievable.

  • New build properties cost more when compared to older builds, so they are more susceptible to downward trends in property values

  • If the build is off-plan and not yet complete, there could be delays in achieving the rental income required

  • Issues such as damp, subsidence, and heave would have been rectified with older builds. For newer builds, there is a risk of having trouble in the future.

New build houses have a higher lending appetite than new build flats, for reasons I will discuss further below.

  • Flats can incur other expenses including ground rent and service charge which is added on top of your mortgage. This can affect affordability when assessing an application

  • Lenders have stricter criteria when lending on flats above commercial property. For example, the location, type of tenant occupying the commercial property, and resale value are taken into consideration

  • The main hurdle is generally the size of a deposit on a buy to let mortgage overcome. For newer build properties the deposit is generally about 10% higher than for newer builds

  • Flats are almost always leasehold properties rather than freehold. There may be instances where the lease can have strict terms and conditions related to the use of the flat

  • If flats are in high-rise buildings or blocks with a large number of units, this can expose the buyer to external maintenance costs that have nothing to do with their unit. Lenders will be more cautious in lending on multiple units in the same block as this can further their risk.

How Much Deposit Will I Need For A Buy To Let New Build Property?

A slightly higher deposit for your buy-to-let mortgage is probably required if you're purchasing a new build property. Due to the increased risk, the majority of lenders demand a 35 percent deposit.

Although not all circumstances will be met by these mortgages, Vida Home Loans and Kensington Mortgages are examples of lenders with the low deposit requirements.

The best rates for a buy to let mortgages are currently in the range of 3.78-4% on a fixed rate at the time of writing- April 2023. However, you'll probably need a sizeable down payment and landlord experience to be eligible for competitive rates.

What Do I Need To Earn To Be Eligible For A New Build Buy To Let Property?

When applying for a mortgage, it is common for lenders to require a projected rental income of 125-140% of the monthly payments.

In addition, some lenders have a minimum income requirement of £25,000 per year for landlords seeking a mortgage. It is important to meet these criteria in order to be considered for a mortgage by certain lenders.

Further Affordability Criteria For New Build Buy To Let Mortgage

The main difference mentioned between a new build buy to let property and an older property is the size of the deposit required.

Typically there is a deposit requirement of 20% for a house and this can extend slightly higher for a flat to 25%-30%.

Many lenders will take the purchase price (not market value) of the property. Other factors include:


Rental Income: You may have questions on what your rental income needs to be or how much are you able to borrow? If you want to calculate a rough estimate, you can use our buy-to-let calculator. It's worth having a look

Other Income: if you have high income from other sources, lenders will take this into consideration. The primary consideration is making sure repayments are paid in case there are instances of rental voids.

Credit History: Although it's not impossible to secure an adverse credit buy-to-let mortgage, it's worth logging onto checkmyfile. It's free for 30 days!

Experience: Lenders will take into consideration how many years of experience you have as a property landlord and the portfolio of your other properties.

Flats can come with additional criteria that lenders look at including:

  1. Some lenders won't look at flats in blocks of five and above

  2. Some lenders are not comfortable lending to flats above a commercial premise

  3. Some lenders will have limits on what they deem reasonable for service charge and ground rent

  4. Some lenders would require lift access for higher-story flats

  5. Some lenders require there to be no unfair financial penalties in the lease

Accelerated Finance has access to over 50 lenders. With such a broad range, we can look through complex criteria, source appropriately, and provide competitive terms for your finance.

If you are looking to get the best deal on a buy-to-let mortgage, you can get started here

What Are The Advantages And Disadvantages of New Build Property Mortgages?

Despite the challenges mentioned, there are definitely some positives to a newly build rental property and how it might be the right fit for your business.

  • New build properties have fewer maintenance issues, so there will be less expense. They are usually covered by the NHBC 10 year guarantee policy

  • New builds are equipped with new fixtures and fittings including newly finished kitchens and bathrooms. This can prove to be more attractive for tenants.

  • In a new build, the property is chain free which might help you to let out the property quicker and generate the rental income required.

  • Landlords need to make sure their properties are energy efficient. In the autumn 2020, the government began a consultation on tightening the MEES rules. Minimum EPC rating to be raised from E to C. New build properties you do not have to worry about this as they are almost always energy efficient so bills will be lower.

There are 'snags' to mention when it comes to new build properties.

  • Research shows that Older houses are generally more spacious than new builds, which can be a significant bonus for tenants. They usually have more parking space and bigger gardens as well.

  • There are many instances where a developer can go into cost overruns and not be able to complete the property in time if the property is 'off plan'. This can impact planned rental income

  • In the first few years, prices of newly built properties don't usually rise as fast compared to older properties. The higher price can also lead to higher mortgage repayments which will lower the rental yield on the property

  • New build properties are often managed by private companies, rather than local councils which could turn out to be more expensive.

Purchasing A New Build Property Off Plan

When purchasing property off-plan, lenders acknowledge the potential risk involved as they are unable to physically evaluate the property before it is constructed. This creates uncertainty for lenders when deciding whether or not to approve a mortgage for the investment.

Furthermore, property prices may fluctuate before the completion of the building works, resulting in a shortfall and adding further risk for both the borrower and lender.

When building a property for rental purposes, lenders may take into account the possibility of delays in the construction process. However, if you meet the necessary criteria for a buy-to-let mortgage, obtaining one should not be difficult.

Providing a well-prepared mortgage application can also support your assessment. Despite these factors, one may assume that purchasing a buy-to-let mortgage for a new build may not be advisable.

However, this is not true as investing in a new build can be a beneficial strategy for landlords. In fact, some lenders offer competitive rates for new builds, and some may prefer lending for new builds due to their advantages.


This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.

Accelerated Finance Limited only considers applications for commercial or investment properties. Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders. Your property is at risk if you fail to make payments on a Mortgage Contract.

Please note that Accelerated Finance Limited and its employees do not give financial advice or recommendations on any product.

Author: Aakash Nagrani - Director 

Aakash Nagrani Author
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