New Build Buy to Let Mortgage
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New Build Buy to Let Mortgage
Jahed Mirza discusses Buy to Let mortgages on new build properties.
Can you get a Buy to Let mortgage on a new build property? How does it work?
Yes, it’s possible. Just be aware that not all lenders are comfortable with new build Buy to Lets, due to perceived risks around resale values and rental demand.
Sometimes these properties can be sold at higher than market value – so make sure you go to the right lender, as many apply stricter rules on new builds compared to standard properties.
What are the eligibility requirements for a new build Buy to Let mortgage?
Lenders will typically want to see a minimum age of 21, and with some lenders it’s 25. Most lenders also want to see you have an employed income of £25,000 or more.
With new builds, a lot of lenders prefer you to have some form of landlord experience, so being a first-time landlord can make it more tricky with new build property.
The property type itself can have an effect. Certain lenders have restrictions around the build type – whether it’s made of concrete, for example, or around the number of floors.
With any Buy to Let property, we need to ensure that the property value, stress rates and rental income all align. The rent usually has to cover 125% to 145% of the mortgage interest, usually at a rate of 5% to 7%.
Are there any restrictions on using Buy to Let mortgages for new build properties?
There are restrictions and sometimes higher deposits are required. The standard requirement is 25%, but sometimes lenders may want 30% to 35% due to the perceived risks of that new build. They’ll limit the Loan to Value.
With flats, they are always more strict. Lenders often have restrictions around high rise buildings, and the likelihood of resale.
They also look into whether you’ve received any developer incentives like cashback or discounts. That can affect whether they will lend to you, because it influences valuations.
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Can you get a new build Buy to Let as a first-time landlord?
A lot of brokers may say you can’t, but a few lenders will allow first-time buyers, first-time landlords, or just a first-time landlord who already owns their own home.
Bear in mind, though, that it again potentially comes with higher deposits and stricter rental stress testing. So it’s possible, but it does come with its limitations.
How much deposit is required for a new build Buy to Let mortgage?
With most lenders, it’s 25%. Some lenders accept 20% as we speak in September 2025, while others are more strict with new builds. You may see some lenders asking for 30% or 35%, but the overall standard is still 25%.
Are there any schemes or help available for Buy to Let investors on new build properties?
Currently there are no government schemes for Buy to Let investors. However, there may be schemes from the developer, perhaps offering some form of discount or contribution towards your service charges etc.
What are the advantages and disadvantages of new build Buy to Lets?
New builds are usually more attractive to tenants. They’re brand new and in perfect condition. They have lower maintenance costs and usually have a strong rental demand. The Energy Performance Certificate ratings are normally A to C, because all the electrics and gas are brand new.
One of the disadvantages is that they are slightly higher in market value. A new build property can be around £50,000 more than a comparable older property in the area. There’s also a more limited lender pool for those new builds, as well.
How can a mortgage broker help here? Have you got anything else to add?
With new builds there’s usually a splurge of interest in an area. We may have already arranged mortgages in that development, so we can tell you which lenders you can go with and which you can’t. That saves you time.
If you’re a first-time landlord, we can advise you on what kind of rent to expect. People often expect more rent on that type of property, but if we’ve been arranging lending on those new builds, we can give you guidance on what the market is like and typical purchase prices. Our experience will definitely add value when you buy a new build property.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
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