The UK housing market has gone from strength to strength in the past 18 months and there was still an impressive overall rise in house prices of 8% from July 2020 to July 2021 despite the deadline passing for the higher rate stamp duty reduction on 30 June 2021. As such, buying a brand new, high spec property in walk-in condition in a good location would seem like a solid investment.

 

 

There are also a number of advantages to buying a new build property versus an older one.

 

• Namely, the fact that it is brand, spanking new! So, everything should be in great condition, and you shouldn’t be faced with costly renovations or repairs.

 

• You won’t have an onward chain since there is nobody needing to vacate the property.

 

• When you buy an off-plan property which is yet to built you can often influence the design of the property and have a say on the types of fixtures and fittings used.

 

• Modern properties are built in line with today’s building regulations which require them to be more energy efficient (saving you money and minimising the impact to the environment).

 

• You have the protection of a new home warranty which protects the buyer against any structural defects: either a 10-year new home (NHBC) warranty or a 6-year architect’s certificate depending on the property.

 

• You can seek financial assistance when buying the property via schemes like help to buy, shared ownership and equity release which are often only applicable for new build properties.

 

However, the big draw-back to a new build property is that much like any other item you buy, whether it be a car or a new mobile phone, once you move in and start living in the property, its main selling point, the fact that it is brand-new, is no longer applicable.

This is why most mortgage providers will generally only provide a mortgage loan for a new build property which is less than the asking price you have agreed upon (around 90% or less) in anticipation of its value decreasing after you have moved in, and the property is no longer new and has seen some wear and tear.

So, does this mean a new-build property is not good value compared to an older home when it comes to a property investment?

Not necessarily if you choose wisely when it comes to your purchase.

As with the property market as a whole, it can be difficult to predict the future price fluctuations of a given property regardless of age. When it comes to a property investment therefore, it is important to buy a new home – new build or not – with the intention of living in it (or renting it out in the case of a buy-to-let) for a good few years before you decide to sell. This should mean that the purchase remains worthwhile financially in terms of purchase fees and any early exit fee from your mortgage if you move within two years or less.

When it comes to future-proofing your new-build property purchase though, there are a few tips we can offer to help you get the best value for money from your property before the sold sign goes up.

 

• As with any property that you purchase – new-build or not – the location is key. Amenities such as good schools and transport links will always stand you in good stead when it comes to property value. If you know an up-and-coming area has planned regeneration in the pipeline getting in early can also see your property price increase in future years once development work is complete.

 

• Always make sure you have done your homework on the developer and property management company (which may be one and the same, or two separate companies). Seek reviews from previous buyers and make sure developers are adhering to current building regulations. You should also look at other properties maintained by the management company to see that both individual properties and communal areas have been well-maintained and that they offer value for money when it comes to any fees.

 

• Make sure that there is a valid new home warranty or architect’s certificate in place and that you have a copy before you buy your new home to ensure any structural defects will be rectified by the developer (and – importantly – at their cost and not yours).  

 

• Seek a snagging inspection in addition to a home owners report from a qualified surveyor as this will focus on issues specific to the construction of the property such as workmanship and any areas which do not meet building regulations or do not meet the agreed upon specification. Ideally you should arrange the snagging inspection for before contracts are signed, but it can still be undertaken once you own the property and have moved in. It might just take longer to get any issues rectified once the developer has received payment!

 

• If you have the option to add value to the property yourself in future whether it be by extending or remodelling the house or garden this is a big plus. You can use Yopa’s online valuation tool to work out how much this could add to your property. It is also possible to get prospective planning permission for a property you do not own yet if you have specific plans in mind and want to find out if they will be feasible before you buy.

 

• If your new build home is part of a larger development, make sure you are aware of just how big the development you have chosen actually is, and whether your build is just the first in a series of wider developments in the surrounding area which could have an impact on the price of your property.

 

 

Do new-build properties really lose value after you move in? is a feature post