If you’re looking to move to a new house in the near future, you might be tempted to buy a new-build home.
While the pandemic disrupted the building of homes for several months, the market for new-builds is starting to bounce back. According to Zoopla, nearly 30,000 new homes were built in the fourth quarter of 2020, up from around 20,000 in the second quarter.
Many of these properties offer a variety of benefits, from low energy bills to a range of buying incentives, but they also have drawbacks. If you want to make an informed decision, read on to find out the pros and cons of buying a new-build home.
Pros
Minimal work for you to do
One of the main benefits of buying a new-build is that once it’s ready, you can usually move straight in and unpack.
New-build homes typically come freshly painted, with new bathroom tiling and kitchen units. This means that, unlike with an older property, you won’t have to waste any time covering up bad paint jobs or trying to hoover dog hair out of the carpet.
Many new-build homes also include new kitchen appliances and smart home features. With some homes, you may have the option to build “off-plan” and choose the design of the home yourself.
Lower energy bills
Since new-build homes have to comply with the latest building regulations, they usually have double- or triple-glazed windows, as well as insulated walls and roofs.
These measures tend to make them much more energy-efficient than older properties, so you could save money on your energy bills.
According to data from the Home Builder’s Federation, more than 80% of new-builds have an A or B energy performance rating, compared with only 2.2% of older homes.
No upward chain
Since you’ll be the first owner of the property, there won’t be a chain of buyers above you, which can make the purchase run more smoothly.
If a seller in the chain above you was to pull out of their sale, it could lead to your own purchase being disrupted.
If you’re buying a new-build however, the lack of a purchase chain gives you one less thing to worry about.
First-time buyers can get government help
If you’re a first-time buyer purchasing a new-build home, you may be able to get financial support from the government.
In England, the latest Help to Buy: Equity Loan scheme can help you to afford the cost of the deposit when buying your first home. Under this scheme, you can borrow up to 20% of the cost of a new-build property, or up to 40% if you’re in London.
To qualify, you must purchase the home from a homebuilder who is registered in the scheme and the home’s value must be below the government’s regional price cap. If you’re unsure what this cap is for your area, you can check the government website for more information.
There may be further buyer incentives
Sometimes, developers of new-build estates will offer an incentive to encourage potential buyers. One of the most common incentives is a cash payment to help you fund your deposit or cover the cost of moving.
Some developers also offer to cover costs such as legal fees or even Stamp Duty payments. While first-time buyers don’t have to pay this tax if the property is worth less than £300,000, it can be a useful benefit for people who are already on the property ladder.
Cons
There may be delays if construction is impacted
One risk with purchasing a new-build home is that they aren’t always completed on time – construction can sometimes be delayed by unforeseen problems.
For example, in the recent months many developers have had their work slowed down by the impact of the coronavirus pandemic.
Long delays could result in you having to pay unexpected costs, such as for storage or more rent while you wait for your home to be finished. If the delay is too long, you may also run the risk of your mortgage offer expiring.
Less space
Typically, new-build homes tend to be smaller than older houses. According to a 2019 study by LABC Warranty, the average new-build home has reduced in size by 20% over the past forty years.
One of the ways this may affect you is that newer homes tend to have less storage space. This can particularly pose a problem if you have children or plan to start a family in the near future.
If you have a lot of belongings, you may want to consider whether you need more space than a new build can provide.
Paying the “new-build premium”
Builders often charge a “new-build premium” which means that a new house can cost more than an older property of the same size and in the same area.
If you are on a budget, this premium may push a new-build home out of your price range, giving you less choice.
While new-build homes are more energy-efficient than older properties, potentially saving hundreds of pounds per year in bills, this increased cost may mean that it is several years before you truly make a saving.
If you can’t decide which is right for you, you may benefit from professional advice
Buying a home is a major life event and a significant financial commitment, which is why it’s important to find the right home for you.
Ultimately, the decision will depend on your budget, your requirements, and your personal preferences, so it’s important to shop around.
If you’re having trouble deciding which type of home would be right for you, you may benefit from speaking to a mortgage broker. A broker can help you to weigh up your options so you can confidently make your decision doubt-free.
Get in touch
If you think you would benefit from professional advice when buying a new home, we can help. Email enquire@london-money.co.uk or call us at 0207 808 4120 to find out more.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.