Tens of thousand of new build homes are built every year in the UK. According to the NHBC around 123,000 were completed in 2020, a fall from the 160,000 completed in 2019 most likely due to Covid.
New builds are an important part of the property market. So here we’ll look at the ins and outs of buying, selling or even investing in new build houses and flats.
First a few of the good things about new build properties:
* New builds are built to the latest designs and styles. They usually incorporate the latest kitchens, bathrooms and energy saving measures. Buyers can often customise their property and have it exactly how they would like it.
New builds are very appealing to buyers – as well as tenants.
* New builds often offer buyer incentives. These can include developer incentives and Government incentives like Help to Buy. These help generate interest and drive sales quickly.
Part exchange is a popular incentive available with many new builds. It can help to avoid sales falling through and to complete more quickly.
* New build developers tend to build in areas with strong demand, and sometimes areas with a shortage of housing. That means new builds can be easier to sell or to rent.
New builds may rent faster and rent at a premium while they are still new.
* New builds benefit from fewer maintenance requirements. There’s no decorating or roof repairs to do, and no bathrooms, kitchens or boilers to replace. This means they can also be cheaper and easier to own and run whether as an owner occupier or landlord.
* New builds benefit from guarantees. This can include the NHBC Buildmark warranty above any guarantee the developer offers. There will also be guarantees on things like boilers and any included appliances.
Next let’s look at a few of the downsides of new build property.
* New builds are frequently marketed before they are built and sold off plan. It can be hard to visualise what you are actually buying.
* New builds usually cost more than a similar existing house. They involve what is often called a new build premium.
The new build premium might mean that the house won’t increase in value for some time. There’s little opportunity to add value. It can make yields tight if you plan to let it out.
Some figures suggest the average new build premium is around 26%.
There can be exceptions here however. It’s possible to get a good deal on new builds. If bought very early off plan, buying a completed house that is proving hard to sell, or choosing a less popular plot it is possible to get a very good new build deal.
* New builds can involve build quality issues and snags which take time to put right .... and can be a real headache.
* New builds are often more compact than older properties in terms of rooms sizes and plot sizes. This can limit their appeal to present and future buyers.
By their very nature new builds also lack period features. Period features tend to be very popular with buyers.
* New builds are often in less popular locations, due to the fact that all the most popular parts of town have already been built up. This can mean that local amenities like shops, schools and public transport are some way away ... or haven’t been completed yet.
New build developments may also lack a sense of community. This is something that can limit their appeal to buyers and tenants.
* New build developments can sometimes involve delays as properties can take weeks or months longer to become ready for occupation than was anticipated. This can cause difficulties if a seller has a house to sell, or a mortgage offer that only lasts for a limited amount of time.
So are new build houses and flats a good thing to buy, sell or invest in? The answer here can only be yes .... and no! Essentially it depends on your own particular requirements and objectives. The important thing to realise though is that new build properties are quite a different buying, selling or investment proposition to existing or ‘old build’ properties.