Is Buying A New Build A Good Investment Post Lockdown?

Written by Myles Hemingway

Myles is our self-confessed ‘word nerd’ and property geek. You’ll find him mythbusting everything from house repayments to maisonettes, as well as giving you our spin on the latest property news and industry trends.

Is now the time to sell your property fast and invest in a new build while the market is strong?

To present, the Post Lockdown Mini Boom has served the UK housing market well. It’s kept it buoyant, coaxed new buyers out of the woodwork and arguably prevented a sudden market crash.

Hint: There’s a reason we’ve put ‘sudden’ in italics.

Great news for both businesses and homeowners alike as for the meantime it’s brought about what appears to be a strong sellers’ market. House prices have touched an “all time high” (BBC) rising 3.8% in July compared to the same period in 2019, since the Stamp Duty Holiday was introduced on July 8th. Plus, demand for new build homes has soared a whopping 66% since the market reopened in June (Zoopla)! And yet, that doesn’t mean we’re in the all clear (anything but) because just as the old saying goes, there’s two sides to every story.

(the reason sudden was in italics)

You see, the Mini Boom was created by releasing pent up demand – enticing those motivated and semi-motivated sellers to make a move now rather than a couple of years down the line, as a way to soften the impacts of COVID 19 on the economy. A clever solution that has indeed prevented a sudden market crash. But has this eradicated the possibility of one occurring in the future? No, it hasn’t – if anything it’s made it even more likely.

By releasing such a rush of demand, there’s a good chance that that market will become exhausted and come March 31st 2021 (when the Stamp Duty Holiday ends) we’ll notice a substantial slump in motivated buyers and sellers. Why? Because the majority of them have already moved.

So with this in mind, what is the most viable post lockdown purchase you could make in preparation for March 2021? We're convinced it's a new build. So, why is buying a new build a good investment? Read on to find out...

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What is a new build home?

Much like the name suggests, a new build property is a property that's available to purchase from new; in the majority of cases you buy a new build property through a developer. Bellway, Barratt Homes and Taylor Wimpey are some of the largest here in the UK.

In a bid to boost the amount of new builds available and to not fall short of its 300,000 new home target, last month the government granted new housing developers with automatic planning permission (part of its 'Build, Build, Build' initiative).

As a homeowner, this means you now have a much wider pool of properties to choose from, and that there's far more likely a new build on the market or under construction that suits you, especially if you’re a picky property purchaser.

The pros and cons of new builds explained

Why is investing in a new build a good idea? To help you answer this and determine whether a new home would be right for you, we've outlined the pros and cons of new builds below.

PRO: New builds are very energy efficient

When weighing up the affordability of any home, energy consumption is one of the first factors that you must take into account. You can do this by checking a property’s energy performance certificate (EPC for short). Learn more about EPCs here.

Choosing a new build with low energy consumption can be a significant advantage. Not only does it reduce your carbon footprint, but it also drags down your energy bills, giving you more financial flexibility. A win-win if you ask us.

Plus, some new builds are even equipped with solar panels, which can potentially make you money by selling the energy you harvest back to the energy company, which makes it a win-win… win (if that's even a thing?!)

TPBC, will this make a new build a good investment for the future?

"Yes, yes, yes! Low energy consumption is always something to look for with any property and an valuable asset come sales time."

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PRO: Typically a new build is low maintainence

New builds should require low maintenance and cost far less in repairs. Being a new home they’re typically susceptible to far less problems and more reliable on the whole due to advancements in building practices and homebuilding technology. For instance, triple glazed windows and insulation.

What’s more, in comparison to older properties, parts should also be cheaper and more readily available. Therefore by owning a new build you hedge the large cost associated with repairing wood apexes or intricate stonework, that you’d more likely incur by owning a property that’s period.

But TPBC, does this really make buying a new build a good investment?

"It really does. Investing in a new build should also mean you get an 10 year NHBC certificate – a warranty that covers you against building defects or issues." To read up more on NHBC certificates, click here.

CON: New builds are no character property

It’s no secret that new builds are worlds away from a period property, so for avid fans of high ceilings and ornate stonework, their minimalist modern design may make them a no-go.

But, what’s your advice to buyers TPBC?

“We completely understand why fans of character properties would quickly recoil at the sight of a new build. However, for those who’re on the fence, we’d say it’s well worth seeing a new build in the flesh before reaching to any final conclusions. While there’s no hiding the fact a new build is anything but period, it doesn’t mean to say you can’t design it using a period style. Adding ornate stonework, cornicing etc. could possibly be specified through your developer."

PRO: Buying a new build comes with developer incentives

As well as making savings when you move into a new build, you can also make savings through your initial purchase. Most developers will offer a variety of incentives to make you more likely to buy through them. For instance, Bellway will your cover agent fees to sell your current house and Barratt Homes will offer NHS workers a 5% contribution towards a new build.

And while these are great, in the majority of cases we think you can go one better.The savvy negotiators can even haggle for a lower asking price or upgraded (and sometimes free) fixtures and fittings!

In your opinnion TPBC, how should we go about negotiating when investing in a new build?

"Be polite is always the best policy. That way you're far more likely to get a good deal!"

CON: Developers are picky with part exchanges

While new build part exchange schemes could be a good option, they can be limiting. Each developer has a set list of requirements for part exchanging your house, many of which could mean this isn’t a viable option for you. Here’s just a few of these catches to look out for…

    • You must own your own home.

    • Your property must be worth less than the new build you’re looking to purchase.

    • Homes of nonstandard construction may be rejected.

    • The location of your property will make or break your eligibility.

But, does this mean a new build isn't a good investment TPBC? Or is there a way around it?

"Thankfully, there is indeed a way around this. While developers are picky, sell house fast companies like ourselves are anything but. For instance, we'll buy any property, any condition, any location. Plus, it's likely we would also be able to get you a better deal than what you're being offered through a developer.

"Also, it's worth remembering that if you're part exchanging your house with a developer and you back out of your purchase, you'll likely loose the part ex deal as well - a double blow! Whereas, if you were to sell you house fast with us and pull out of a purchase, we'd still remain your buyer. Want to put us to the test?"

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PRO: Buying a new build also comes with government incentives too

In many cases, the government will also offer support for those looking to buy a new build.

The most popular form of support is the Help To Buy scheme, which (providing you’re eligible) allows you to buy a new home with just a 5% deposit. This means that those of you who are first time buyers can quickly hop onto the housing ladder instead of waiting years to save a big enough deposit. To put the scheme into perspective, it means you could get into a £300,000 new build for just £15,000!

Is there another way to invest in a new build TPBC?

"Shared Ownership could be another option if you’re looking to acquire a new build with limited funds. Unlike Help To Buy, this scheme allows you to buy a proportion of your property and pay a small rent to your housing association for the rest."

PRO: A new build is move-in-ready

One of the biggest perks of new build properties is that they’re what’s known as move-in-ready – a snippet of property jargon that means a home is fully decorated. If you’re not a fan of D.I.Y., move-in-ready homes may be the option for you.

Move-in-ready homes have their advantages. Most of the time, going down this route allows you to settle into your new home far quicker than with a fixer-upper (a house that needs some work). It also means that instead of finding the time to decorate, footing all the costs and then doing it wrong, you can leave it to the professionals and have a home with a high quality finish first time round.

TPBC, is there more to a move-in-ready new build?

"There is indeed. Don’t have the time for furniture shopping? No worries - you can often buy a new build fully furnished. That’s another thing off your ‘to-do’ list" (tick).

CON: Some newbuilds have a reputation for snags

This is not so much a con with new builds, but more just something to watch out for. As you can expect with new build communities expanding rapidly to meet government targets, there can be slight issues with quality and fitment. Common complaints include the height of carpet preventing doors from closing and that garden fences aren't quite straight. But providing you do your homework and choose a reliable developer, this shouldn’t be an issue.

Is buying a new build a good investment if there’s issues with quality? How do we get round this TPBC?

“The easiest way to get issues like this sorted is to get yourself a snagging survey. ” To learn more about snagging surveys and why they're beneficial when buying a new build, click here.

PRO: Buyers of new builds can design their home

Fancy becoming an interior designer for the day? Choose a fully furnished new build and you could do just that.

You’ll be pleased to know that developers understand the importance of interior design - the ingredient what ultimately turns your house into a home.

Opt for a new build and you’ll have a vast catalogue of options to choose from. Granite worktops, plush paint colours, vintage wallpapers, stainless appliances, recessed light fittings, fancy furniture and ornate tiles are only the start. Rumour has it you can even equip a new build with an Aga range cooker. How contemporary is that!

But that’s not to say your design input can’t go even deeper. Depending on the house, you may also be able to make some structural changes as well. Not a fan of interior walls? You may be able to go open plan. Want a pair of bifold doors onto the garden instead of a generic window? You could specify just that too. Fancy using your loft space as a bedroom? Loft conversions may also be available.

Are there any specifics you'd recommend TPBC?

"The option that we’d advise you go ahead and specify is an LED underglow for your kitchen cupboards. While at first it may appear to be bit of an unnecessary gimmick, it turns out to be surprisingly useful. On those early mornings or late nights when you don’t want to be blinded by the main light, it’s a great alternative."

PRO: New builds are the end of the chain

If you’re fed up with the hassle of property chains or afraid of chainbreak, investing in a new build could be a wise idea. Dealing direct with the developer opposed to a private seller is a simple way to minimise your timescale, as it puts a stop to any upward chain. A great way to ensure you’re moved by March 2021 and make full use of the Stamp Duty Holiday.

TPBC, are there any other ways I can escape a chain?

"While buying a new build streamlines your purchase, for the quickest possible move you need a speedy property sale too. Being a trusted cash buyer of property, we can cut out any chance of a lower chain and complete in as little as 7 days."

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PRO: New build properties appreciate

Do new builds increase in value? It seems so.

According data released by property developer, StripeHomes, in June this year, the price of new build properties increased by an astounding 7.3%, while for an existing home this sat at just 1.5%. Across the UK as a whole, no new build price was found to have increased less than 6%! Pretty encouraging if you ask us.

Any top tips of how to keep the resale value of a new build up TPBC?

"There’s two main things we’d suggest. First is be mindful when designing your interior. If you’re looking to sell on within a couple of years, then stay away from garish colours and ‘out there’ designs. Keep it simple and minimalistic. The more you think about future buyers when designing your home, the less ammunition they have to cut you down on your asking price.

"Second is to invest in a strong market and try to identify an upcoming area. In the study above, London was the top performing region, hardly surprising, but nevertheless proof that when it comes to appreciation, location matters."

PRO: Leasehold VS Freehold - Leasehold new builds are no longer a thing

Contrary to popular belief, all new build houses are now sold as freehold properties.

Prior to June last year, new builds were indeed sold as leasehold, which led to many buyers being faced with catastrophic ground rents that were doubling by the year and ridiculous charges if they decided to purchase their property’s freehold. In some cases, owners even had to pay their freeholder if they wished to make a change to their house repayments. EEEEK!

Any advice on tenure TPBC?

"The Leasehold VS Freehold debate can be tricky to understand. To learn about tenure in more detail click here."

So, is buying a new build a good investment?

In a world where the future of the property market remains uncertain, we’d say that buying a new build is a good investment and makes rather a lot of sense. Government and developer schemes make them easily attainable, the majority are well located (a bonus for commuters), they cut the hassle of D.I.Y. and are likely to cost you far less in outgoings.

Ask us and in the event of a market crash, we feel the new build market is also likely to remain the strongest. Why? Because new builds are the ‘safe’ option, they’re the family cars of the property world. Reliable, cheap to run and in essence they do exactly the same job as other more flamboyant alternatives - i.e. period and character properties. Kind of a kooky analogy we know, but nevertheless one that highlights just how beneficial new builds could be during hard economic times.

So, is buying a new build is a good investment post lockdown? Yes, in theory. However whether a new build is right for you entirely depends on your own personal circumstances. If, and only if, you can comfortably afford to upgrade to a new build would we suggest you do so. The last thing you want to be is financially strapped before a recession.

Although, if you answered 'No' to the above because you haven’t yet sold your house, we may be able to help. In case you haven’t already worked out, we’re a cash buyer of property who specialise in purchasing homes across England and Wales.

With over 50 years combined experience in cash property purchases, we’re a ‘Sell house fast’ company that you can trust. But don’t just take our word for it. Give us a ring today to get your no obligation cash offer.

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