Want to buy a new build, but unsure if it’s the right choice?
Buying a home is a big decision, so it’s only right that you do your research before committing to a purchase. As a buyer, you might be considering buying a new build but may have heard whispers that they decrease in value after buying one and questions around whether they hold their value long-term.
Read on to gain a better understanding of what it means to buy a new build and let’s bust some common myths.
What are the benefits of buying new?
First off, let’s take a look at some of the benefits you may enjoy when buying a new build. Below are several advantages that make it an attractive option for many homebuyers:
- No chain: This can significantly smooth out the buying process, as you're not waiting for the seller to find a new property, meaning no onward chain.
- Brand new everything: Move in without the stress of costly repairs or renovation projects.
- New home warranty: Enjoy extra peace of mind with 10-year warranty included, such as the National House-Building Council (NHBC) or Local Authority Building Control (LABC) to cover potential issues.
- Energy efficiency: Save money on bills and reduce your environmental impact.
- Personalisation: If buying off-plan, you may have input on design, layout, and fixtures, as some developers have optional upgrades available to choose from at any stage of the build.
What happens to the new build’s value after buying it?
Just like with any other property type, external factors such as the general housing market conditions, potential oversupply in the local area, or initial overpricing compared to similar local homes can affect the value of a new build. If you’re buying a new build off-plan, you secure the home at the price of the current market at reservation. This means that by the time the property is built months later, you could benefit from the potential that the market has increased, meaning your new build could be worth more by the time you collect your keys.
What’s the difference between a new build and a second-hand property?
The most obvious and main difference between the two is, of course, that one has been lived in, and the other is brand new.
Research from the Financial Times also mentions that “buyers of new build homes may not build up equity as quickly as their peers in a market with rising house prices”*. This could be due to various aspects, including the new build premium (as mentioned above); however, they also mention that “for many people, buying a new build will still be the right choice, especially if it helps them avoid large refurbishment costs, or they value the better energy efficiency.”*
What a new build property can offer buyers, that a second-hand home can’t, is additional buying support. Some of these might include cash incentives that help buyers fund their deposits or discounts on stamp duty and/or legal fees.
Additionally many of the benefits listed at the beginning of the article, no chain, brand new everything and personalisation are part of what differentiates the property types from each other.
How can I future-proof my investment?
Similar to buying second-hand, protect your investment by considering these strategies:
Research the developer: Look into their track record and speak to previous buyers about their experiences.
- Investigate the property management company: Ensure they offer value for money in maintaining communal areas.
- Verify the new home warranty: Ensure you have a valid 10-year warranty or 6-year architect's certificate.
- Conduct a snagging inspection: This can highlight any issues before you complete the purchase.
- Check future development plans: Be aware of any planned changes in the surrounding area that could impact property values.
- Choose your location wisely: Look for areas with good schools, amenities, or planned improvements to transport links.
- Consider potential for adding value: Check if there's scope to extend or modify the property in the future.
So, is buying a new build a good investment?
Buying a new build, just like buying second-hand, is generally considered a good investment. Many people who buy new do so with the intention of living in the home themselves post-purchase, before moving out and selling it. New build properties, like most other properties, are best seen as a long-term investment. If you consider that all homes were once new builds, and that since the 1980s UK property values have increased by 174%, property tends to be a good investment.** Of course, there are always exceptions to the rule, and you should consult a financial adviser to figure out what’s best for you.
Our key takeaway for you is that new builds can be a solid investment, especially if you plan to live in the property for several years. Over the years of ownership, you're going to have little, if any maintenance costs, whereas a period home may have some maintenance builds. Do your research, talk to your local property market experts, so that you can make an informed decision and protect your property investment.
