Show homes are generally the first homes built on any new development. They are a crucial tool for housebuilders – promoting and showcasing everything that is great about their new site. So it’s no surprise they’re carefully kept in pristine condition.
With this in mind, an increasing number of new and experienced investors are turning to new housing developments for a significant return on their money. They’re buying show homes and then leasing them back to house builders for a set period of time.
Show home leaseback schemes are quite obviously attractive to those seeking buy-to-let opportunities. Some may be looking for their first asset, others might be professional investors – or buyers considering property to fund their retirement. But there are also some who might not be ready to move into their new home just yet, and are simply seeking a guaranteed tenant and monthly income in the meantime.
Housebuilders like Barratt Homes and David Wilson Homes spend time and effort ensuring their show homes are exquisitely decorated and fitted out with the very latest furniture by top interior designers. So it makes sense for them to hang on to them in order to show off all that is good about their latest project.
Conversely, buyers viewing show homes are often attracted to them, and who can blame them? So here’s the perfect solution. Leasing a home back to the developer can give excellent returns, with many properties fetching a yield of around six per cent for up to three years – far more than the rental market rate.
Rather than having to worry about untidy tenants, investors know that housebuilders will maintain a show home in immaculate condition, and maintenance costs are non-existent. And investors take the view that the direction of house prices in the medium term is up – so they expect to be looking at a tidy profit at the end of their lease period.
During the lease back, investors also have the peace of mind that their new-build homes benefit from the 10 year Buildmark Warranty from the NHBC. And some developers also offer additional, more extensive, warranties for a set period of time.
For housebuilders, show homes are crucial. They are effectively the shop window of a development. They generally have landscaped gardens and they’re spotlessly clean. They are very much a well-kept secret among astute property investors because even those who take out mortgages to fund them see an excellent return. What’s not to love?
Check out some of the most impressive show homes open to the public on our featured interiors page.