Thinking of buying a new build home? Roarie Scarisbrick, partner at Property Vision, considers the pros and cons.
Cost
Buying a new build is rarely cheap. In fact, it is often 30 per cent more expensive than buying an older home in the same area.
Many new builds, especially flats, are serviced, with porterage, lifts and communal facilities. This comes with high service charges. I can’t think of a single case where charges have gone down.
Energy efficiency and maintenance
On the flip side, period properties have quirks. You might find that they require more maintenance — unsurprising in a building 100 or 150 years old. An older home is also likely to be less energy efficient than a new build.
We’re likely to see more regulation around this in years to come so you might end up spending more on retrofitting a period home to meet the ESG standards of the future.
Will it be a good investment?
Period properties tend to have more individual character, having been adapted or changed by successive owners. Their supply is also limited — nobody is building new Victorian terraces.
Long-term investment potential is hard to gauge for new builds. In big redevelopment areas there is a lot of supply. Apartments can be generic, so when you come to sell the value will be tethered to the last flat sold or others that are on the market in the same building. You will also be competing for buyers.
I have seen cases where investors have tried to sell ahead of completion and undercut the developers to get a sale. Choose a high-quality building and plump for a unit with attributes that make it shine.
What are you buying?
There are good homes in bad buildings and bad homes in good buildings. You can change the latter but rarely the former.
Make sure you have a clear picture of what will be built around you over the years. This is true for any property but especially so for a new build. Whereas a period property might be in a conservation area where development will be restricted, it is common for a new flat’s view to be obliterated by the next tower to be built after you move in.
In an older home you have the advantage of being able easily to find out who the neighbours are, how often they move and whether they own or rent.
In a new build you will need to research other buyers. If most owners will be absentee landlords, getting their agreement to spend money on maintenance works will be difficult.
Fellow owner-occupiers will be much more invested in keeping the building smart. This is also true in converted period buildings.
Think of buying a new build home is like buying a brand new car: you will pay a premium for a new finish.
If the building management and location are good, then there is no reason why the premium should not persist — but be extremely careful to think ahead to how things will look down the line.
