Posted on 13th April 2013

Why New Buy is not Always as Safe as Houses

Martin Williamson, Head of Residential PropertyHomebuyers wanting to get a first foot on the housing ladder and those looking to progress in the property market can benefit from measures announced in the Budget that have started this month. Those looking at buying a new-build property are being offered a lifeline in the form of an interest-free loan as part of the Help to Buy scheme. This incentive, coupled with the growing number of government and industry-backed finance schemes to encourage builders to construct more new houses, have all helped to make new-build more attractive. Before taking the plunge into the property market, however, homebuyers should be aware of the respective advantages and disadvantages of both new buy and old buy.

New houses can often be more appealing than an older property, as they can mean that refurbishment and maintenance costs in the early days are kept at a minimum. They can also present something of a blank canvas on which householders can make their mark. Buyers, however, should be aware that a new-build is not necessarily less problematic than an older property. Stumbling blocks such as poor workmanship, delays and unexpected costs can quickly take the shine off a new home.

New builds tend to be more energy efficient, which is particularly useful in these days of escalating energy prices. All new properties must have an energy efficiency rating of at least C (rates are between A and G), with higher requirements for housing association and council homes. Many, however, do not score above C, so do not necessarily expect an A rating on a new-build house.

The majority of new-builds also come with a guarantee from the builder. If the property is registered with the National House Building Council (NHBC), it will come with a 10-year warranty and protection scheme.

Anyone contemplating buying a new-build property should also be prepared for the downsides. Buyers may not have considered comparing buying a new home with purchasing a new car, but it is important to be aware that both can depreciate alarmingly. Buyers of new builds can expect to pay a 25% premium compared to an older more established property.

One of the main reasons why many people decide to buy an older property is because they are concerned about a lack of space in newly built homes. Typically, homebuyers will be able to afford less space for their money when buying new over old. It is certainly worthwhile to compare old and new properties for their respective space, value and rental value.

Buyers should also keep a close eye on the anticipated completion date when buying new. A mortgage offer is usually only valid for six months and the timetable to complete can be something of a movable feast. This means that if buyers arrange their finance early, they could lose a mortgage offer if the completion date is delayed for any reason.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.ukor call 01325 341500