New-Build Flat to Let: How to Choose the Location and Layout

When buying a new-build flat to let, it pays to choose according to who will live in it, not according to your own ideas of housing. Smaller flats with a well-designed layout in locations with good transport links to workplaces and schools are usually the easiest to let. Before you decide, check the specific yield and risks with a mortgage specialist and a tax adviser or lawyer.

Start with the target group of tenants

Do not choose the location or layout until you are clear about whom you want to let the flat to. Each group looks for something different:

• Singles and couples look for a smaller flat with good connections to the centre or to work, often with a balcony and space for a home office.
• Families with children need more rooms, a quiet neighbourhood, and a nursery, school and services within walking distance. They usually stay longer, but have higher expectations of the furnishings and the surroundings.
• Students and young people at the start of their careers often look for shared housing, so larger flats with separate rooms may make sense.
• Professionals and employees of local companies value proximity to employers, parking and the option of a shorter stay.

The target group affects everything else: the size of the flat, the parking requirement, the commuting distance and how you furnish the flat.

How to assess the location

A good location for an investment is not necessarily the one most visible in listings. For letting, steady demand and practical accessibility carry the most weight. When assessing a location, pay attention mainly to the following:

• Transport links. The real journey time to the city centre or to the main employers during the morning rush hour, not the distance on a map. Try making the journey yourself on a weekday.
• Local amenities. Shops, a doctor, a nursery, a school, sports facilities. Tenants get used to everyday convenience and leave sooner without it.
• Local employment. A town with several strong employers, a university or a hospital tends to be more stable than a location dependent on a single industry.
• Surrounding buildings and planned development. Check the zoning plan to see what is planned in the area. New amenities improve the quality of a place, whereas a large construction project or a new road may reduce it.
• Supply of similar flats. If many comparable flats are being built nearby, you will be competing for tenants. Compare how many similar new builds are on offer and how long the flats stay vacant.

An overview of areas and their character can be found in the locations section. You can compare specific listings in the project catalogue.

Which layout to choose

The general rule is this: the more versatile the flat, the wider the range of potential tenants and the lower the risk that it will stand empty for long. In practice this means:

• Smaller flats (1+kk, 2+kk) usually have the widest demand among individuals and couples. They are cheaper to buy and to run, and easier to let again after a tenant leaves. On the other hand, tenants change more often.
• Medium-sized flats (3+kk) appeal to couples with a child, small families or flatmates. They let more slowly, but tenants stay longer.
• Large flats have a narrower circle of interested parties and tend to be more demanding from an investment point of view. They make sense mainly where there is specific demand from families.

More important than the layout designation itself is the quality of the floor plan. Look for a logical arrangement without unnecessary corridors, enough storage space, bright rooms and the possibility of setting up a work corner. A balcony, loggia or terrace is practical, as is a cellar or storage room. Tenants often take outdoor space into account when deciding.

Parking, furnishings and running costs

When choosing a flat, also think about what will affect how easy it is to let and your costs over the period you hold it:

• Parking space. Outside the centre, this is important for many tenants. Find out whether the space is included with the flat or purchased separately.
• Energy performance and technology. New builds tend to be cheaper to run than older buildings, which is an argument for tenants. Ask the developer which technologies the building uses and how services are billed.
• Contributions to the repair fund and building management. These costs reduce your rental yield. Ask for up-to-date information and find out how the building is managed.
• Furnishings. A furnished flat is easier to let and more flexible, but requires an initial investment and later maintenance. Think through the decision on furnishings according to the target group.

Financing, prices and the risks that are easily overlooked

Before buying, calculate the total return, not just the purchase price and the expected rent. The calculation should include financing costs, taxes, insurance, management, maintenance and periods when the flat is without a tenant. A calculator will help you get your bearings, but it is advisable to discuss the specific loan terms and tax implications with a mortgage specialist and a tax adviser. Have the contractual side of both the purchase and the letting reviewed by a lawyer.

Compare prices across locations and developers. An overview of indicative prices can be found in the section on new-build prices, and information on individual companies in the developers section. When choosing, also look at the developer's track record with completed projects and handover deadlines.

Risks include delays in completing construction, a longer period without a tenant, a change in demand in the location or lower build quality. Allow for a reserve and do not rely on the flat being occupied immediately after handover. The general steps involved in buying are described in the buying guide. If you are looking for a specific flat according to your own criteria, you can also use the housing inquiry form.

Frequently asked questions

Is it better to buy a smaller or a larger flat to let?

Smaller flats usually have a wider range of interested parties and are easier to let again. Larger flats may make sense where there is demonstrable demand from families. Decide according to the specific location, not according to a general rule.

How can I tell whether there is stable rental demand in a location?

Look at the listings of similar flats, how long it takes for them to be let, the presence of employers and schools, and transport accessibility. Talking to local estate agents and building managers is also useful.

Should I get advice from a professional before buying?

Yes. A mortgage specialist will go through the financing and the effects on your mortgage, a tax adviser the tax questions and a lawyer the contracts. Every situation is different, and a general article cannot replace their assessment.