A common discussion that takes place is which properties are better to buy; New Builds or Old Builds? We’ve listed some of the pros and cons of both below.
New Builds Pros
Help to Buy
The governments flagship scheme is only available for new build properties. Help to buy is an equity loan scheme that lends you up to 20% (40% if buying in London) of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% (or 55% in London) mortgage to make up the rest of the price.
10-year NBC warranty
Most new build properties come with a 10-year NHBC warranty cover which comes in two parts:
- Part 1: 10-year structural warranty.
- Part 2: 2-year fixtures and fittings warranty.
This should give you at least some peace of mind in case any issues arise.
If you are purchasing a new build property that is yet to be completed, you can decide on the exact finish you want, this can be anything from the colour of paint, flooring or even things like built in wardrobes. You can also work with the developer to choose options such as bathroom fittings, kitchen appliances etc. The key point is; You will not have to live with design choices from previous owners.
You can move straight into a new build property (providing it has already been built!) You don’t need to wait for a seller to move out and you also do not need to worry about a seller pulling out.
On site facilities
New build properties tend to come with extras such as concierge, gym rooftops and even cinema rooms! (This can also be a disadvantage as extra facilities tend to come with higher service charges)
More Energy Efficient
New build properties tend to be more energy efficient than older properties. With ever increasing energy costs this can provide you with significant savings on your energy bills.
New laws have also been introduced regarding energy performance. From 1st April 2020, the Energy Performance Certificate (EPC) of all tenanted properties must be an E or above. Landlords who don’t comply with the regulations may face penalties of up to £5,000. If you’re a landlord purchasing a new build, this is a cost you won’t have to worry about.
Developers are always under pressure to hit their sales targets so there is normally room for negotiation.
If you buy off plan you may be able to get an ‘early bird’ discount, meaning your new property could be worth more than you paid for it by the time you have actually moved in. In addition, if you buy off plan and early you will have first choice over the best/biggest plots!
Developers also tend to offer incentives such as contribution towards deposits, legal fees and furnishing.
New build properties tend to be designed for modern living. This usually consists of open plan living rooms/kitchens to reflect modern societies social way of living, rather than more formal and dated principles of separate rooms living rooms and kitchens.
New Build Cons
New build properties often come with a premium price tag (no surprise as they are new). However, a bit like buying a brand-new car, the price of a new build property depreciates as soon as you move in.
The average new-build property in the UK costs £290,176, which is 29% higher than the average price for existing properties, according to Land Registry data.
Difficult to add value to
It’s hard to add value to a property that is brand new. New build properties also tend to have less land around the surrounding areas, making it difficult for you to add value through an extension.
You should also bear in mind that if your new build is part of a new development that is still offering homes for sale, your second-hand house will be in direct competition with the brand-new properties if you wanted to sell.
Lack of character
Whilst you are able to choose certain features to add some individuality to your home, the reality is that all new build properties within the same development will have more or less the same internal layout and external features. This makes it hard for new build properties to stand out from others.
Several issues can arise when building a development which can cause delays to the finishing date. It is always hard to predict when a new build development will be completed as construction can be affected by weather and planning issues amongst other things. This can be problematic if you’re in a chain as you may incur temporary rental accommodation charges if you’ve already sold your property.
NB. Buyers can’t pull out and reclaim their deposit until building works look likely to exceed what’s known as the “long-stop” date – (the final date by which a property can be finished), which is often buried in the small print.
NB. If there is a delay on completion you may need to redo your mortgage application if it expires.
Lack of parking
Parking on new build developments if often scarce and buyers often have to pay a heavy premium for a parking space.
The governments London parking plan states that: All developments in areas of good public transport accessibility (in all parts of London) should aim for significantly less than 1 space per unit.
Living on a building site
Developers don’t wait until the whole development is finished before allowing buyers to move in. It is likely that you’ll have to put up with things like:
- Dust/air pollution
- Noise pollution
- Weekend working
- Access problems
- Contractors parking
According to the annual customer satisfaction survey by industry body the Home Builders Federation, an overwhelming 99% of new homeowners report snags or defects to their builder after first moving in.
We often hear stories of developers being reluctant or slow to come back and fix issues once buyers have moved in. Before moving into a new build property, it is imperative that you carry out a snagging check!
Pressure to use their services.
Some developers try and pressure prospective buyers into using their conveyancers and mortgage advisers. Be aware that this is not compulsory, and you are allowed to choose the conveyancers and mortgage advisors of your choosing.
New builds have less space.
New build properties are often smaller than older properties. Research has found that the UK has the smallest homes by floor area in Europe; the average new build home in the UK is just 76 square meters compared with 137 square meters in Denmark. Furthermore, a study in 2018 found that UK homes built since 2010 offer an average of 67.8 square meters of living space, the lowest in 90 years, according to analysis by LABC Warranty.
Naturally, developers will try and squeeze as many properties as legally possible into the land they have available.
Old Build Pros
Old built properties are known to be well built on solid ground. A property that has been standing tall for several centuries has proven the test of time. There is no guarantee that new build properties will stand the test of time in the same way that older properties have.
Can add value easily
Old build properties have significantly more space for extensions and loft conversions to be built which in turn can add value and space to a property. There is also scope to refurbish an older property to your taste which can also add value.
Cheaper than new build properties
Old properties do not come with the price premium regularly attached to new build properties. This can give buyers the flexibility to renovate or furnish their property to a higher standard after purchasing.
Older properties tend to have classic/original features. Ranging from the flat exteriors of a Georgian property, to high pitched roofs or a fireplace in every room of a Victorian home or the red brickwork of Edwardian property. Old properties are blessed with character, the same cannot always be said about new builds.
Bigger in size
As mentioned before; new build properties have been found to be smaller than older properties. With most older properties you will be able to enjoy the benefits of features such as; bigger gardens, off street parking and more storage space. As an investor, a spacious property is also good for prospective tenants. In addition, more space can also give you an opportunity to convert your property into a house of multiple occupancy.
It is much more likely that a local community would have already been established along with local amenities such as schools, restaurants, bars etc. New build properties on big developments may not have already established these amenities.
Old Build Cons
More chances of defects/issues
Naturally there’s more chance of finding issues and defects in an older property due to general wear and tear. Fixing these issues can increase your upfront costs once or even before you have moved in.
It is wise to carry out a survey when purchasing an older property. Whilst this is not a con, the additional costs of carrying out a survey is something to consider.You can read more about the type of surveys you can carry out here.
If you’re buying a leasehold property, it’s likely that the lease term on an older property will be significantly lower than a new build property. A low lease drops the value of your property and is also expensive to extend.
Expensive energy bills
Unlike new build properties, older homes do not tend to be as energy efficient. Older properties may not come with energy saving features such as double-glazed windows or thorough insulation. This can be problematic especially for landlords.
As mentioned above; from 1st April 2020, the Energy Performance Certificate (EPC) of all tenanted properties must be an E or above. Getting a property up to the right energy standard can be expensive. A recent report by the Telegraph found that one in three landlords cannot afford to upgrade their properties’ energy efficiency to meet the tough new laws.
Previously; landlords could apply for a ‘high cost exemption’ if improving the energy efficient would cost more than £2,500 for a property. However, the cap has now been raised to £3,500.
To qualify for an exemption, landlords need to supply three quotes from different suppliers to the PRS Exemptions Register, a public database, to prove the work costs more than £3,500.
You’re more likely to have to carry out renovations on an older property as they tend to have ageing features and have been lived in for a significant amount of time compared to new builds. Most people that buy an older property will want to renovate it to their taste. Whether that is just a lick of paint or new flooring, it’s still an additional cost worth considering.
Risk of a chain
Unlike new build properties, there’s an increased chance that you will be involved in a chain when buying an older property. Chains can be unpredictable and stressful especially if they’re broken or stretch out over along period of time. You can read how a property chain can work in your favour here.
So .. Old Build or New Build?
As you can see, there are several pros and cons of both. Whether you decide to purchase a new build or old build is very much down to personal preferences and in some cases comes down to what you can afford. What we would say is; be open minded and ensure you consider the upsides and downsides to both!
*This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.