Traditionally, newly built homes sell for a premium compared to an existing property. That’s because properties that have just been built are secure, energy efficient, low maintenance and require little money spent on them to bring them up to modern standards. What’s more, they tend to have the fastest available broadband and connectivity and have the latest appliances, fixtures and fittings. A new property is turn-key ready for the buyer to make it their own.
Is the premium worth it?
But when you look at the details, is it worth paying a premium? On a national level, housebuilding activity has been highest in southern regions, especially London as housebuilders target the upper end of the market and build luxury homes in some locations.
Buyers looking for a new home need to look at whether the build premium is worth paying. For those taking advantage of government incentives, it can be a worthwhile investment as buyers can benefit from an interest-free loan for all or part of the purchase, enabling them to buy a more spacious property or move to a more desirable area.
New homes are generally more energy efficient than older properties, require less maintenance and have a warranty should anything go wrong. In addition, new developments sometimes offer property types that are not currently plentiful among the existing housing stock such as good-quality apartments for those looking to downsize and detached family homes, especially in areas of high demand.
New homes also tend to be cheaper to run, feature modern conveniences, have sufficient parking including electric car charging and sometimes good quality lift access. The apartments available for those looking to downsize are of exceptional quality and generally speaking, developers only build homes close to a range of amenities that will appeal to buyers.
The downsides
There are of course some downsides to purchasing a new property. Although the property is seen as turn-key, buyers may need to address snagging issues with the developer.
Newly built family homes can be smaller than their older counterparts with lower ceilings, less storage space and smaller gardens (despite the large show homes) because developers tend to maximise the available space on the development site. You may also be surrounded by other houses with views into other people’s gardens as trees and shrubbery haven’t matured to provide the privacy often seen in older homes.
Finally, new homes don’t benefit from an immediate increase in value when compared to existing homes for sale. However, most people when moving to a family home rather than a smaller starter home see it as a long-term move to see the children through their preferred primary and secondary schools. Similarly, those downsizing to an apartment see this as a long-term move. There also isn’t an option to add value by undertaking large home improvement projects or modernising the property with updated decor but the lack of expense required to get the home up to standard is appealing to many.
If you’re considering a new build, talk to us at Talk Mortgages to find out more about government incentives and green mortgages that you may be able to take advantage of.
