Should You Buy A New Build?

Everything you need to know: new build vs old

should I buy a new build
buying a new build

Should I buy a new build?

Should I buy a new build? Or, are new builds even good investments? These are some of the questions that might be running through your head – and rightly so. 

Buying a home is a huge decision, so you need to explore all of the options. And with the Government committing to building 300,000 homes a year the time to ask the question has never been more important.

In this guide we will cover:

  • o Is buying a new build a good investment?
  • o Do new builds go up in value?
  • o How long will a new build last?
  • o The pros and cons of buying a new build

o And many more.

So, let’s jump in!

buying a new build

Should I buy a new build?

Should I buy a new build? Or, are new builds even good investments? These are some of the questions that might be running through your head – and rightly so. 

Buying a home is a huge decision, so you need to explore all of the options. And with the Government committing to building 300,000 homes a year the time to ask the question has never been more important.

In this guide we will cover everything you need to know.

So, let’s jump in!

NEW BUILD VS OLD BUILD INFOGRAPHIC
buying a new build

Helping you decide: Should I buy a new build?

There are many factors to consider when considering if you should buy a new build or not. From price and risk, to styling and potential appreciation. The first thing to consider is that asking ‘is a new build a good buy?’ is the wrong question. Instead, consider asking ‘Is a new build right for me?’

So, we’ve compiled a list of all the important factors and scored them for ‘new builds’ , ‘existing housing’ or a ‘draw’.

You can read through them and decide which of the below are most important to you, and we’ll bring them together for a clear answer at the bottom.

So, should I buy a new build? Let’s get started and see!

the advantage of buying a new build

What are the advantages of a new build?

Should I Buy A New Build

Chain free

All new builds come with zero chain, compared to 34% of regular housing

Is buying a new build a good investment?

Incentives

Upgraded kitchens, carpets, bathrooms, gardens, Stamp Tax, legal - endless options

Questions to ask when buying a new build house

10 year warranty

You will enjoy a 10 year NHBC warranty for your property

new build appreciation 2019

cheaper to run

New build properties save on average over £600 per month in comparosin

how to negotiate new build house price

Flexibility

Developers can be more flexible in terms of dates & helping with your deposit

Buying a new build home process

Incentives

You will be the first person to ever live in this property and you design it all

Do all new builds have service charges?

What are the advantages of an old build?

Best quality new build homes

Cheaper

New build properties have a premium on their price, though there is help to buy

Do new builds go up in value?

Character

There are a greater variety of properties with character available on the market

Is new construction a good investment?

Better Parking

Old constructions tend to have greater space for parking

How do I buy a new build house?

more spacious

The sq footage like for like will be bigger in an old build due to the premium

How long will a new build last?

no service charge

Most houses don''t have the nominal service charge that new builds do

VAT on new build

Where it's a draw

Do new builds have thin walls?

Time

They both have their pluses & minuses but are evenly matched

Are new builds worth it?

Negotiation

You can negotiate with both but over completely different things/incentives

Do new builds appreciate?

Appreciation

Despite the premium, both types appreciate at the same rate

Should I Buy A New Build

New builds are chain-free & low risk

As you might be aware, a chain occurs where home buyers or home sellers are linked together because the sale requires the purchase of another property. Said another way, you’re selling a lovely flat to Bob, but in order for Bob to purchase that from you he must sell his two-bed detached and in order for that to happen he needs Susan to sell her property so she can buy from him – and so on.

Chains have been known to be 24 properties long – and even longer!

The great advantage to buying a new build is that the new build developer does not have any chain whatsoever. This means your purchase is less-likely to fall-through due to a chain-related issue.

The added bonus is that you will never be ‘gazumped’ when buying a new build. One is ‘gazumped’ when you have an offer accepted on a property and then, later down the line (potentially  you have accrued legal fees & other costs), the seller accepts a higher offer from someone else.

Leaving you stranded and emotionally frustrated.

With new build properties you’re buying from a company and have the assurance that wouldn’t happen.

In this sense, they are lower risk and easier to buy.

If you’re in the process of moving, you can update your address online for free at this part of our site.

Is buying a new build a good investment?

What types of new build incentives are there?

So, the interesting part: what are the types of new build incentives are there?

When it comes to new builds it’s all about the incentives!

So, what kind of incentives can you get when buying a new home? If you were on the edge when asking yourself ‘should I buy a new-build’, this might just push you over!

Here are a few of types of things you can expect:

Best quality new build homes

Stamp Tax Paid

Have some or all of your stamp tax when you purchase a property

legal fees included

Legal Fees Paid

Don't fancy paying legal fees? You're in luck! They can thrown in too!

upgrade kitchen in new house

kitchen Upgrades

Enjoy premium worktops, lighting, usually integrated appliances and lots more

free travel card

Free Travel Card

You could have a free rail card or even use of a shared 'site car'

are new builds overpriced?

Free Turf

Grass might come as standard or a brand new garden be thrown-in

are new builds more expensive?

Moving contribution

Your developer can pay for your moving costs, make your move a lot easier

are new builds hard to sell?

Free rent

If you do the help to buy, developers can even cover that portion of rent

Home Upgrades

Premium carpet, full-tiling in the bathrooms and kitchen wardrobes - you name it

This is not an exhaustive list, but we can already see the scope to add value to the transaction is massive.

With a new build company being able to pay your stamp tax or legal (which can be tens of thousands) it can make purchases more accessible and be the difference between affording the house now and in 12 months time.

The ability to style your house as you like it is a huge plus and it’s also important to remember that extras are just that – extras.

Try to see past ‘the sparkle’ of a new wine cooler and think of things on balance. These things are amazing to have and an obvious benefit, but if you can get a house £30,000 below market on the flip side it might not be worth it.

 

Questions to ask when buying a new build house

New builds come with a 10 Year NHBC Warranty

All newly constructed properties have a 10 year NHBC buildmark cover.  The benefits are excellent and NHBC defend you against any unscrupulous new build developers (which are few and far between). When asking yourself ‘should I buy a new build?’, this is key to remember.

Before completion NHBC cover your deposit up to 10% of the property if the new build developer becomes insolvent. 0-2 years your new build developer will take care of any defects and HNBC will be an arbiter if there is a dispute. Then for years 3-10 years, you have builder warranty, contaminated land cover & building regulations cover.

new build appreciation 2019

Are New Builds Cheaper to Run?

Is it true, are new builds cheaper to run? Almost always, yes – though it depends of course.

For lots of different reasons, new builds will almost always be cheaper to run.

Things don’t tend to break as often they’re brand new and if they do they will be replaced/fixed. You’re therefore spending less money each month on repairs.

What might really surprise you is the difference in running costs.

According to the Home Builders Federation, new homes save £629 per anum on their energy bills.

Energy Performance Certificate data shows that 80% of new builds have the top energy efficiency rating (A or B), while only 2.2% of old builds share in that rating.

how to negotiate new build house price

Enjoy more flexibility

When developing a series of new homes the developer will often make multiple variations and lots of them – often in phases. As a buyer who might want to live in a particular location or might not be ready to move home yet it gives you a lot of flexibility.

For instance, if it’s January and your ideal home will be built in June but you’re not ready until December you could reserve a later plot.

New developments are very helpful if you know you want to live in the area and since they genuinely want to sell you (hopefully) the home of your dreams they will work with you to make it work. This could be move in dates, paying your deposit later, covering your legal fees and anything in-between. 

Buying a new build home process

A Blank Canvas

Putting the financial and operational aspects to one side, one thing you cannot deny about a new build property is the fact it is a total blank canvas.

Aside from the structure & lay-out (which is hopefully something you love) you can design it however you like.

You can choose the colour scheme, the light fittings, what type of carpet goes down and so on.

It is easy to change elements in a regular house as we all know, but much easier when everything is white-walled and ready for you to put your touch on them.

One of the best things about a new build estate is that it is a new build estate. This means brand new roads, new garden, boiler – everything.

Best quality new build homes

Are new builds more expensive?

You might have heard about the ‘New Build Premium’, and from the data it seems to be a real thing. Are new builds more expensive? Yes.

According to 2019 data from the Land Registry,  the average price of a new build is 29% greater than existing housing.

The average price of regular housing was £224,729 whilst new builds were £290,176. This is the average and the numbers hide spikes, which becomes evident when you consider that the disparity in price was 41% in Scotland and only a 3% difference in London.

And this is interesting, but what does it actually mean in practice?

It means that you will probably pay a little more than it’s worth for the fact that it is new. That difference can be partially or entirely offset by incentives provided by the developer. What also should be considered is that the very fact there is development in the area means new shops, a greater demand on schools and resources which can lead to further development – potentially increasing the areas overall value.

Purchasing a new build is compared a lot too buying a brand new car: It loses values when you take the keys. Now you know the answer the next time you’re questioned on whether or not new builds are more expensive.

However, if you buy a new build property you can take advantage of the help to buy scheme.

There is so much to say on the help to buy scheme, but it effectively allows you to put-up only 5% of the deposit instead of 10% which can make purchasing new builds a lot easier and more accessible

If you’re wondering ‘should I buy a new build?’ and your’re extremely price sensitive (that is, you want to make money on the purchase) – it might be a no. However, new builds will appreciate in line with regular housing and what you might not get in equity purchase you can make up for in incentives such as your stamp tax and legal fees being covered.

It’s also really important to remember that you should only buy a new build if you plan to live there for a few years. If you try to sell it 6 months after buying the home you will more than likely be competing with the developer and because of their incentives and resources, that’s a selling war you will never win.

Do new builds go up in value?

Do new builds lack character?

This is a controversial one, but one of the criticisms of the majority of new builds is that they lack a certain character. If you’re looking for a unique home with unique features – hatched roofs, or Victorian styled exteriors, you might be better placed with a non-new build housing. That said, there are some new build developers who are focused on creating homes with character – Gatsby Property, for instance.

Is new construction a good investment?

Better parking

In general it is the case that new build properties have less parking space than old build properties.

You need to take this on a case-by-case basis and of course it does always depend.

The reason why some new builds have less space for parking than properties already constructed comes down to developer incentives – i.e. making more profit. They need to have parking, yes. But for every meter they give a house in any direction is a foot they cannot build another house on. Ideally they want to maximise the amount of homes they have for the land they have bought without compromising on the living quality. That said, it doesn’t mean parking will be bad just that sometimes parking, on average, could be a little worse.

On the flip side, some older homes will have been built in a time when cars were not prominent – hence the roads were not built for cars. It’s all on a location/developer basis.

How do I buy a new build house?

Old builds have more space

Your average new build would seem to have less space like-for-like compared to any old build. However, this varies so much from developer to developer it’s almost not worth considering.

You’re far better off looking at the property for what it is and assessing whether or not you need more space. It’s even the case that some new builds have more space than old builds. Homes seem to be getting smaller. In fact, the size of the average home today is 20% smaller than ones built in the 1970’s.

One thing to be wary of when you look at a show home is that it is just that – a show home. Everything is organised and designed perfectly to get you to buy. They have maximised the living space to make it look as spacious as possible, so it’s important to see past the design and imagine the practicality of living there.

Since new builds have a premium attached to them, if you did take the same amount of money onto the market and were looking in the same area it stands to reason that you would get more space.

How long will a new build last?

No service charge

One of the best things about a new build estate is that it is a new build estate. Brand new roads, greenland – potentially parks. However, all of that requires upkeep. And gardeners/maintenance don’t tend to work for free. With most new builds there will be some sort of small service charge. 

That said, you can get service charges with older built properties and the price of the service charge can be almost negligible (£10 per month) but could be higher. It will vary from site to site, so you’ll need to check at the site you’re considering.

It’s best not to think of avoiding the service charge as a game-changer because when considered in context of how much money you will save on your energy bills. If you’re looking to reduce your costs, you’ll definitely want to check out this article on how to save money when moving home.

Below is an example breakdown of what your service charge might look like on a new build, thanks to a contributor on MSE. They, for instance pay £12.50 per month. Here is what the total annual breakdown looks like:

If the service charge was weighing heavy on your thinking of  ‘Should I buy a new build?’, the size of the cost might put your mind at ease.

And don’t forget, all of that money is going towards improving your living space which you’ll less likely get in an old build.

Do new builds have thin walls?

How long do new builds take to complete?

The style of the property and the number of properties being built can influence how long they take to be built. It also depends on at which stage of the development process you begin speaking with the developer. It’s possible that they will actually have properties available to move in to immediately.

Your standard process of buying regular housing can take around three months – accompanied by the risk of people pulling-out and the like.

So, when asking ‘how long do new builds take to complete?’ It completely varies, but somewhere between 0 & 6 months is great working practice.

It’s also good practice to consider that a longer wait time might be preferable to you. It removes the hassle of having to try and find a property later in the year and can give you more time to save a deposit and get prepared for the move.

This one is essentially a draw.

are new builds hard to sell?

Can you negotiate the price on a new build?

Can you negotiate the price of a new build? It’s a good question! Generally, no. But it does happen sometimes.

If you’re wondering ‘why can’t I negotiate the price of a new build?’ it’s due to the developer and property values. If you’re buying ‘house type A’ from a development and let’s assume that every other property has sold for £200,000.

If they were to sell you the same property for, let’s say £180,000, it would prevent the developer selling further properties at £200,000. Not only would it significantly undermine their credibility with those to whom they have already sold, when a mortgage valuer comes out to value ‘house type A’ on the next sale they will see that the previous of its kind sold for £180,000. Therefore, they cannot conclude that the value of the property is £200,000 which means no bank will lend money at that valuation.

It will also devalue all existing properties on the development.

The only exception is at the very end of the development if it’s the last house and they’re really struggling to sell it.

Obviously, you can negotiate the price with regular housing – and indeed you should. Here’s a great article on how to buy a house below market value if you’re interested in learning more about that.

And whilst you cannot negotiate on price with new build properties, you can negotiate on lots of other things such as extras. stamp tax, legal etc… This means that the substantive benefit is the same.

Do new builds appreciate?

Is buying a new build a good investment?

There isn’t tonnes of data out there on how new builds themselves appreciate.

But it’s a great question: how do new builds appreciate, and is buying a new build a good investment?

The general consensus is that new builds appreciate in line with all other properties – not faster and not slower.

You will have paid slightly more than the market value of the property when you bought it – how much more depends on your geography.

Consider that what you overpay for in your premium you might save more than in repairing and replacing items within your home over the first 10 years.

All things considered, buying a new build is a great investment.

buying a new build

Final thoughts: Should I buy a new build?

So, should I buy a new build? New builds are excellent, though not without their minuses. 

The better question to ask would be ‘is buying a new build right for me?’ because it depends on your circumstances. If you’re not sure how to buy a new build house, check below.

The best approach would be to write down what the important factors in your purchase are, such as: Do I want a hassle-free experience? Do I want to make money out of the deal? Do I want lower running costs? Do I want a blank canvas? etc… But we must also consider all of the incentives and schemes such as help to buy.

Remember, every house is a new build just some have been around for longer.

Most people cite ‘thin walls’ and ‘poor quality’ for reasons as to why they wouldn’t buy a new property.

It is the case that some large-scale, low-cost developers might suffer from these issues but the majority do not it seems.

In conclusion, the negatives around buying a new build property are over-egged and buying one should definitely be considered.

Frequently Asked Questions

Do new builds go up in value?

Asking if new builds go up in value is a very common question. The short answer is yes. From the data we have we can say that new builds appreciate at the same rate as all other properties. However, when we purchase a new build we have paid a premium, meaning the actual value can be 0-10% below the price at which you purchased it. So if we took a £200,000 new build, minus a 5% premium (£10,000) would be a £190,000 property appreciating like everything else. So, do new builds go up in value? Absolutely, yes.

How do I buy a new build house?

Lots of people aren’t sure on how to buy a new build house. We start with how to find a new build house. To do that we would start with an online search on RightMove or Zoopla and filter by ‘new builds’. Alternatively, if you know which developer you’d like to buy a home from (say for instance, Strata Homes) and browse through homes. Now we know how to buy a new build house, the next part is to the procedure. The developer will Shepard you through the process, though you will still need to elect your own legal & conveyancing. The typical time frame can is 3- 6 months but can be as short as 4 weeks! 

How long does it take to buy a new build home?

When we ask ‘how long does it take to buy a new build home?’ people struggle to answer because it varies so wildly. On average it takes 3-6 months to purchase a new build home. Firstly, the date at which your home you are buying will be actually constructed will affect how long the new build takes to build. If the home is already built, it will take the same amount of time as every other home – around 3 months. If the home is due to be built at a time greater than 3 months, the completion will be in the month it is finished being built. Most developers will have some available immediately and some being built 6 months – 24 months into the future. If you were to force an average, within a 6 month time frame you should be able to buy your desired property. So, how long does it take to buy a new build? 3 months up to 12 months, dependant upon the built completion.

Is buying a new build a good investment?

Asking whether or not buying a new build is a good investment is an excellent question. We want to live an excellent place and also want to know it will serve us well. So, is buying a new build a good investment? Yes. Firstly, we need to appreciation that we will generally overpay for a new build by 0% – 10%. This is generally because of the extras and incentives the buyer gives to you and the ‘new build feel’. Once we discount that new build premium, the home will generally start to appreciate in line with every other home. The key difference: Because it is a new build, you will save thousands on repairs and upgrades. You have a 10 year NHBC guarantee for anything that goes wrong and when we take that 10 year saving against the premium and time saved it starts to look very interesting. Beyond finances, a new build is a good investment into your personal well being, being complete and relatively hassle-free.

Buying a new build home timeline & buying a new build process

The timeline for buying a new build is different, dependant upon the developer you’re purchasing from. Understanding the buying a new build process is helpful in terms of shaping your expectations, We will assume that the property will be read to move into within 4 months. If it is later than 4 months, a few of these steps will be pushed back.

Day 0 – You have decided which home you’d like. If the price has been released you will need to put down a deposit of around £500 and if the price hasn’t been released the developer would still ask some sort of deposit. You will also need to get your mortgage in principle.

Day 30 – Enlist solicitors and work with the new build developers to push through the key paperwork. You will also need to get your mortgage offer at this point.

Day 40 – Choose your extras. Around this time, you’ll be picking-out what types of extras you’d like in your new home from the carpets and wardrobes to kitchen and towel warmers!

Day 60 – A lot of new build developers will look to exchange contracts by day 60. This means having your deposit, if they wish to exchange early. This will also mean that you are legally tied into purchasing the property, or at least paying the deposit. Developers often do this to secure their build portfolio and, dependant upon their size,  to cash flow the rest of the build.

Day 120 – After 4 months you’re ready to move in! At this point the home will have been exchanged and completed, assuming the development time-frame hasn’t been pushed back – which can be the case with bad weather etc… You will then be handed over to the after care team, who will walk you through settling in your new home. Also, you will be producing a snag-list and the developer will look to repair/amend any defects in your new place.

The timeline for buying a new build does vary, but the above should give you a rough and working idea of the process of buying a new build and what the timeline tends to look like.

 

How to negotiate new build house price 2020 UK

As a general rule, it is difficult to negotiate the price on a new build property. Decreasing the value of a house for one sale will cause the house type to be devalued. However, although rare, there are some occasions in which you can negotiate the price of a new build. So, here’s a quick overview on  how to negotiate new build house price:

Off Plan: If the developer has yet to start building, or is in the early days they may still be looking to secure finance. By securing buyers quickly 

Year End: And half year! When a developer is approaching the end of their financial year is when they’re scrambling around to really hit their sales targets – which is great news for us! It’s the time when a developer is much more likely to lower the price of a new build. The month of year end can be found using companies house. 

End of Development: If there are only a couple of homes left on the development you may well be in luck for a new build bargain. Developers may be most willing to negotiate with you at the end of their development for two reasons:
1) They’re wanting to wrap up and move their focus and resource to a new development.
2) Negotiating the price of the remaining new builds won’t affect the sale price of the rest of the development- as they’re already sold!

Hopefully this gives you a brief overview on how to negotiate new build price for 2020 and beyond!