Should You Buy a New Build or Existing Property for Investment? A Landlord’s Guide
When you’re looking to grow your property portfolio, one of the first decisions you’ll face is whether to invest in a new build or an existing property. Each option has its own set of advantages and risks, and your choice can impact everything from your tax obligations to your cashflow, tenant appeal, and capital growth potential.
Here’s a comprehensive look at how each option stacks up—and how to decide which best fits your investment strategy.
New Builds: The Pros and Cons
What Counts as a “New Build”?
In New Zealand, a new build typically refers to a property that was built in the last 12 months and has not been lived in before. It can also include off-the-plan purchases and recently completed developments. For tax and lending purposes, new builds are treated differently to existing properties—and usually more favourably.
The Benefits of Buying a New Build
1. Lower Deposit Requirements
New builds often require just a 20% deposit (even for investors), compared to 35% for existing investment properties under current LVR restrictions. This makes them far more accessible for investors looking to leverage equity or get started with less cash upfront.
2. Lower Maintenance Costs
Brand new homes come with modern materials, warranties, and the peace of mind that major repairs are unlikely in the first 5–10 years. This reduces unexpected costs and appeals to tenants who value clean, modern living.
3. Tenant Appeal
New builds often attract strong tenant interest, particularly from professionals or small families looking for low-maintenance living with modern features like double glazing, heat pumps, and insulation. This can reduce vacancy rates.
The Downsides of New Builds
1. Limited Locations
New builds are often located on the outskirts of urban centres where land is available. These areas might not have the same demand or growth potential as inner-city suburbs. Transport links, schools, and amenities can also be limited in newer developments.
2. Slower Capital Growth (in some markets)
Some investors find that capital gains on new builds are slower in the first few years—especially in areas with a lot of similar properties being built at once. It can take time for a new suburb to develop a unique identity and grow in value.
3. Smaller Section Sizes and Density
Many new builds are designed for maximum density—townhouses, terraces, or duplexes. While this suits some tenants, it may not appeal to long-term renters who value larger sections, garages, or privacy.
Existing Properties: The Pros and Cons
Why Some Investors Prefer Existing Homes
1. Established Neighbourhoods
Older homes are often located in mature suburbs with established infrastructure, schools, public transport, and demand. These locations can offer strong long-term capital growth and steady tenant demand.
2. Value-Add Opportunities
With existing properties, you can increase value through renovations—updating the kitchen, subdividing the land, or adding a minor dwelling. These “sweat equity” opportunities aren’t usually available with a turnkey new build.
3. Historical Price Performance
You can review a property's sales history and see how it has performed over time. This gives you better data for forecasting value growth and rental trends.
The Drawbacks of Existing Properties
1. Higher Deposit Requirements
For investors, existing properties generally require a 35% deposit. This limits borrowing potential and can tie up more of your capital—especially if you’re trying to grow a portfolio.
2. Higher Maintenance and Compliance Costs
Older homes may need upgrades to meet Healthy Homes Standards—insulation, heating, ventilation, draught-stopping, etc. You might also face more ongoing repairs, from plumbing issues to roofing or weatherproofing.
3. Tenant Turnover
Depending on the condition and layout, existing homes may not be as attractive to renters—particularly younger tenants who prefer modern features and lower power bills from energy-efficient homes.
So, Which Is Better for Investment: New Build or Existing?
It depends on your strategy.
If your goal is long-term capital growth and you’re happy to take on renovations, an existing home in a high-demand suburb might make sense.
If you're focused on cashflow and tax efficiency, or you’re starting out with a smaller deposit, a new build can give you better leverage, lower holding costs, and fewer compliance headaches.
In 2025, more investors are leaning toward new builds—particularly for their tax advantages and lower LVR requirements. But that doesn’t mean existing homes are obsolete. In the right suburb and with the right improvements, they can still deliver strong results.
What Kind of Investor Are You?
Ultimately, this decision comes down to your risk tolerance, borrowing capacity, and goals. Are you looking for yield or growth? Are you hands-on or hands-off? Are you expanding a portfolio or buying your first investment?
A chat with a mortgage adviser can help you model the cashflow for each type of property, identify bank policies that work in your favour, and structure your lending for the best outcome.
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