Many homebuyers assume that purchasing a brand spanking new home is a smart idea. Surely buying a newly constructed property is better than buying a “used” one, right?
Not necessarily. While there is a seemingly endless list of pros to buying a new build -lower repair costs, modern, energy-efficient appliances, and being move-in ready – what many first time buyers don’t realise is that new build homes still often have a variety of hidden costs.
These costs come in a number of forms. Some of the hidden costs of buying a new build home are financial and will leave your pockets a little lighter, while others are more physical, causing your living situation to be poorer.
So, if you’re thinking of purchasing new construction from a builder or developer, here are the hidden costs of buying a new build home that you should be wary of.
When you buy a new build home, you’ll have to be prepared to pay a premium for the privilege of living somewhere no-one else has.
Although it might be nice moving into a property where everything is brand new and unused, you should expect it to be more expensive.
Not only does this mean you’ll be paying more to buy the property, but it also means that it will likely be devalued when you come to sell it.
It is thought that the new home premium can account for as much as 10% of the home’s value, instantly trapping some new homeowners in negative equity. If buyers were purchasing existing properties, they wouldn’t be running that risk.
As well as the initial premium price of new builds, there are a number of additional hidden costs associated with buying a new build that you should consider before committing to a purchase.
You would think that owning a home would mean an end to paying rip-off rents but, you could be wrong if you’re buying a new build. New-build buyers are often hit with a barrage of monthly charges that buyers of existing properties aren’t. These can include:
Increasingly, new build properties are being sold as leasehold. This means that the buyer has to pay a monthly ground rent to whoever owns the lease.
On top of the cost of leasehold charges, many new-build buyers will move into properties with fixed management companies already in place. These companies maintain the shared spaces of the building, such as stairwells or outdoor spaces.
Then, on top of all that, many new build properties, especially flats and apartments, don’t come with any parking space. In that case, flat owners may have to rent a car parking space at a cost that can range anywhere from £25 to hundreds of pounds a month, depending on where they are.
When it comes down to the pragmatics of moving into a new build home, you might have some issues fitting all your kitchenware into your very few cupboards.
One outcome of the small kitchens often found in new build properties is the lacking cupboard space. As a result, when buying all your new home essentials, you might want to limit the number of pots, pans, tins and dishes you purchase.
Bear in mind that when buying things, from loo rolls and pasta to baked beans and tea bags, you’ll have to buy them in smaller quantities – and this makes everything more expensive.
When viewing new build homes, make sure you take note of how much cupboard space there is and whether you think it will suffice for all your possessions.
Just like an older house, a new build property could contain a number of hidden defects that might require costly repairs. Electrical wiring could be incorrect. Roofs could start leaking. A weak tile could crack. The toilet flush might not work properly. Most problems that you could find in an existing home, could also be found in a brand new one.
To protect yourself from having to fork out these potential hidden costs of buying a new build, it’s a good idea to thoroughly research the builder’s reputation and arrange for an inspection by an independent home inspector who isn’t affiliated with the builder.
It’s not just a lack of cupboard space you should be worried about when buying a new build, but new homes tend to be much smaller in general. This leaves very little space to fit all your furniture and socialise.
New-build buyers snapping up a tiny home could soon find that they can’t fit more than a couple of friends in the main room of the property. So, when you want to gather with friends or invite the family round, you’ll have to go elsewhere – most likely the pub, where it will cost much more.
New build properties often come in a standard, basic form, which means they often miss a lot of things you need or want.
It is fairly common for new build homes to lack a number of interior essentials, such as some appliances and window coverages, along with exterior features like decks, fencing and landscaping.
While it might not seem like too much effort to add these items yourself, they can only be added at a rather large expense. Therefore, to minimise the hidden costs of buying a new build house, you should ask what’s included in the price of the property, note what’s missing, and do some research to see how much these items could cost.
If that proves to be too costly, look for a new home that comes with all the essentials.
When the developer is trying to sell their new build homes, they will often shout about all the extras the buyer can choose themselves, such as flooring, cupboard doors, and other fixtures and fittings.
But, beware! These extras don’t come for free. Even if you decide not to purchase these extras in the first instance, the likelihood is that you’ll have to buy them further down the line. This wouldn’t necessarily be the case in an existing home, where all these extras would already be in place.
Some builders do include these upgrades in the standard model and factor them into the base price, however. So, it’s just important to make sure you know what’s included before falling in love with something you can’t afford.
When buying a new build on a new development, you don’t really have a clue what you’re buying into in the long run. What will your neighbours be like? Will more houses be built on the land next door? Will these affect your home’s resale value?
Sometimes it’s necessary to take a chance when purchasing a new build, just make sure you find out as much as you can. If you’ve got a question, ask it!
Although conditions can change in established neighbourhoods too, at least they have a history and a reputation that could give you a better idea of what life will be like in your new home.
So, considering all these hidden costs of buying a new build house, are they overpriced?
Despite various schemes and incentives available for those buying a new build property, analysis of data by professional cash buyer, Open Property Group (OPG), suggests that they are still out of reach for many.
So, why are new builds so expensive?
It’s no secret that new builds carry a price premium. Buyers are paying more to be the very first owners of a property that’s newly decorated, kitted out with modern appliances and built to be energy efficient.
Yes, always negotiate a new build house price. Just because a property is brand new, doesn’t mean the asking price is non-negotiable.
You can make an offer on a new build in exactly the same way you would if you were buying an older property. Of course, this doesn’t mean the developer will definitely accept your offer – but it’s worth a try.
If we’ve learnt anything from this article, it’s that you shouldn’t make assumptions about what you’ll be getting if you buy a new build home.
There are many hidden costs involved in buying a new build house and even more uncertainties.
However, if you properly prepare for the process and know exactly what you’re getting yourself into, you’ll know whether buying a new build property is the right choice for you.
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