Should you buy a new build?

By Gordon Miller & Sarah Warwick
channel4.com

As all those trying to get on the housing ladder or trade up to a bigger property will know only too well, although average UK house prices have retreated from their peak of 2007, they have regained ground.

However, when you look at the cost of buying a new build rather than a previously owned property, what you might need to spend looks a little different. The average price paid for a new property in the UK over the year to April 2011 was £196,434, while the average price paid for a pre-owned property over the same period was £205,072, according to the government’s house price index (opens in a new window) (opens in a new window). So with new builds appearing to be a better value buy, should you be buying new?

What Are The Benefits Of New Builds?

You Don't Have To Redecorate Buying a new build can be very appealing. You can often choose decor, kitchen units and appliances, as well as other finishes when you buy, so you don't have to budget for redecorating to create a home that's to your taste rather than the previous owner's.

Build Quality Should Be Good You don't have to wonder about the quality of a previous owner's DIY efforts, either. Most new homes are covered by an NHBC (opens in a new window) warranty and insurance cover. NHBC standards provide technical benchmarks for the home's construction, and its Buildmark warranty means you are insured against defects and damage (but not things such as condensation, wear and tear, normal shrinkage and so on).

The Chain Will Be Short Moving into a brand-new home also means a shorter chain of housemovers. If you have a property to sell, you're still subject to the chain that leads to your buyers, of course, but you're not waiting for someone to move out, who in turn is generally dependent on other people. There are also part-exchange schemes for new builds, so you could avoid this hassle, too.

Interior Layouts Will Be Well Designed A well-designed new build can also offer layout and room options you might have to alter an older property to achieve. Kitchens big enough to eat in, open-plan living areas, more bathrooms and so on can all mean you won't need to spend extra money once you've moved in.

Energy Issues

Another potential upside of buying new is the house or flat's energy efficiency. Built to adhere to the current building regulations, new homes should help you save money on your fuel bills.

Simon Wright, chief executive of Simon Wright Homes, picks up on the innovative and eco-friendly aspect of buying new. 'Most new build houses are now being built to level three of the Code for Sustainable Homes, a code which assesses the sustainability performance of a property across nine design categories including energy, water, materials, waste, pollution and ecology. Therefore, new homes are much more energy-efficient than second-hand properties, which is not only good for the environment and for reducing bills, but will help with their resale value as the government continues to push for more energy efficient housing.'

Are New Builds Priced Higher?

If you asked your mates if they would consider buying a new build house the answer would be much like asking whether or not they like Marmite: half would love it and the other half would hate it. There's no in-between, it seems. Why should that be? After all, by comparison, you almost never hear people say: 'Yes, I can afford a new car but what I really want is a second hand one.' So, is the price of 'new versus old' the deciding factor?

Bill Gair of Urban Renaissance Villages, builders of Bramshott Place Village in Liphook, Hampshire, says, 'New homes, in a normal market, tend to cost more and maintain high re-sale values for the same reason that new cars cost more - because they are new. Buyers prefer them as no one has lived in the property before, and there are no hidden DIY-nasties.'

Piers Banfield, sales and marketing director for Banner Homes, says, 'The market demands a premium [because] there is an undoubted kudos to owning a new home and people will pay for that. New homes come with new carpets, new appliances and the knowledge that the buyer will not have to spend any more money on DIY or modifying the property. New homes are also the only ones that come with a guarantee and people are aware of the value this represents.'

But not all developers agree that new costs more than old. Matthew Byatt of Newhall Projects, who are the developer behind the innovative design- and eco-led new homes at Newhall, Harlow, says, 'New homes do not always cost more - there is obviously a premium because you are the first to own the property, but equally a second hand home can have had a complete makeover prior to coming onto the market and therefore demand a higher price.'

'New homes often cost less than their second hand equivalent as the surrounding landscaping might not be mature and the home might still be in a building site. Buying new gives a purchaser peace of mind because of the warranties and guarantees associated only with new build homes. They are also likely to have all the cutting edge, lifetime homes and/or eco-friendly essentials that current buyers expect as well as AA rated appliances.'

What are the good things about buying a new build?

The Pros Of Buying A New Build

• Choice of design: new homes come in an array of styles and sizes. You can opt for an ultra-modern apartment or a traditional style house that has been designed to blend in with the local architecture.

• Highly specified and contemporary interiors: new homes are designed to meet the needs of modern living and so use space efficiently and effectively. In many new homes the kitchens are ergonomically laid out and well equipped with stainless steel appliances. Well-proportioned lounges offer space to relax and entertain, while many properties also have separate dining rooms, studies or family rooms. Master bedrooms feature en suites and many bedrooms have fitted wardrobes to provide useful storage space.

• Choice of fixtures and fittings: dependent upon the stage of build, buyers can choose their own fittings and fixtures for their new home in a choice of finishes. As a result of this, buyers have a clean canvas and can create an interior to suit them.

• The latest technology, such as the latest CAT5 cabling and phone points to all main rooms; the option of having surround sound installed with plasma screens fitted flush to the walls.

• Environmentally friendly: new homes are designed to minimise waste and to work with the environment. This means lower running costs compared to traditional homes and a more eco-friendly way of living.

• Lower maintenance costs: with everything in a newly built home being brand-new you will not need to spend money on home improvement costs for some considerable time.

• Warranty: buying a new home can also give you extra reassurance as house builders will provide you with a guarantee, but there is also a 10 year 'Buildmark' warranty that is provided by the National House Building Council (NHBC) which provides additional peace of mind about the quality of your home.

• No chain: when you buy a new home, you can move in as soon as it is completed, allowing you to bypass the often stressful selling chains. You may also be able to negotiate a part exchange on your old home. 

What are the negatives about buying a new build home?

The Cons Of Buying A New Build

• Higher cost: new build homes can cost more than a comparable second-hand home. However, it is hard to compare directly because no two homes or locations are alike - not even houses next door to one another - within hours of moving in no two houses will be furnished or decorated the same.

• You might need a bigger deposit: it's also worth thinking about financing your purchase. 'Lenders will typically insist on a larger deposit on a new-build property than they will on other property,' says David Hollingworth of London & Country Mortgages. 'Lenders take different approaches, so it really is a case of shopping around.'

• They're not individual: new-build homes tend to look the same. However, nowadays 'pepper potting' - the dotting around a development of different types - apartments, detached, townhouses - and sized properties reduces the 'sameyness'.

• They look new: it all looks, well, new. Undeniably new homes look new, but the use of weathered timber cladding and brick means new doesn't always look as new as it used to. Increasingly the planting of mature shrubs and trees lessens the look of newness of a development. 

• They lack character: the character of an older property will sway some - and it may be that you love what the previous owner has done. The proportions of the rooms in an older home can also be more generous, depending on the age of the property. The fact that it's proven its soundness by standing for many years might also influence your choice.

• Their impact might be negative: new developments are often perceived to have a detrimental environmental impact on an area. Often there is a great disruption but in areas deemed sensitive environmental assessments are undertaken and developers are legally obliged to develop responsibly. Additionally, many housebuilders will voluntarily undertake beneficial environmental schemes. 

Do new homes lose their value quicker than an older home - just like cars? And should you buy?

Do New Builds Hold Their Value?

Trevor Britton, managing director of Belstone Homes, says, 'No. If a new home is well looked after, it will increase in value at the same rate as other properties. Similarly, if the market is falling, new build properties will fall at the same rate as other properties in the same area.'

Is Now A Good Time To Buy New?

Eager to sell homes, the builders of new homes have offers with which to entice those looking to buy. You'll find incentives such as help with deposits, stamp duty payments, part exchange, free appliances and so on. Be aware that some help is for first-time buyers only, and make sure you weigh up the true value of an incentive - is it actually going to save you money on moving or buying a house, or is it just a nice extra?

So are the developers' incentives genuine, or are prices bumped up so that offers can be made? Jo Richards, marketing and corporate manager at Hillreed Homes, says, 'No. Incentives are exactly that. Developers are well aware of the market place. A company that is astute enough to recognise a change in the market place is a development company that survives the current difficulties. The company takes a cut in profit but moves with the times - and the buyer benefits in the long term.'

Additionally, the 'giveaway gravy train' has been derailed. Housebuilders are now monitored as to what incentives they are allowed to gift, with the 'in-kind incentive benefit' given a cost value, as Janet Burnell, sales and marketing director, Pentland Homes, explains, 'Developers are now very limited on the incentives they are able to offer; all have to be listed on a Council for Mortgage Lenders (CML) Incentives Form which is given to the surveyor and the buyer's solicitor.'

How To Choose Your New Build

So, assuming you do want to buy new, how do you differentiate between the myriad of builders? Wright says:

Check out the developer: it pays to do your research to ensure you are buying from a reputable developer.

View their previous work: if buying off-plan, see if you can view a previous development they have built.

Speak to former purchasers: where possible, speak to people who have already bought a new home from the house builder or development you are interested in to get their views.

Ensure faults are covered: make sure the property is covered by a 10 year guarantee such as NHBC and check what the developer's aftercare service is once you have moved in.'

Buy in a good location: as with a resale property, when it comes to buying a new build almost every house builder spoken to was in agreement that location should be top of the list. Belstone's Britton says, 'When buying a new build home, never forget the old adage: location, location, location. Do not compromise location in order to get a cheaper price because in the long run, the price differential between the two locations will further increase.'