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The Pros and Cons of New and Old Builds

23 Nov, 2021

There are many factors to consider when considering if you should buy a new build or not. From price and risk, to styling and potential appreciation. So before purchasing an investment property, check out this guide to understand each of the given options’ pros and cons. You'll learn everything you need to know to make an informed investment decision.

Why buy a new build?

Use of government schemes

Schemes like help to buy offers you equity loan with just 5% deposit. So, you can secure your new home sooner than you think!

Incentives

Some developers throw in extra to get a sale. This could mean paying your stamp duty or covering the cost of carpets. 

Lower bills

New built properties are more energy efficient as they comply with latest building regulations and environmentally friendly materials.  So, they have higher Energy Performance Certificates (EPCs) ratings, which results in lower energy bills. 

Warranties

Most new build houses in UK come with a 10-year structure warranty from National House Building Council (NHBC). Before completion NHBC cover your deposit up to 10% of the property if the new build developer becomes insolvent. 0-2 years your new build developer will take care of any defects and HNBC will be an arbiter if there is a dispute. Then for years 3-10 years, you have builder warranty, contaminated land cover & building regulations cover.

Influence the final finish

By purchasing in the earliest phase, you can influence the direction and specification of the finished property. 

Chain free

You are the first owner of house. You can move in as soon as the house is complete. No hassle of waiting for existing owners to move out. The added bonus is that you will never be ‘gazumped’ when buying a new build. One is ‘gazumped’ when you have an offer accepted on a property and then, later down the line (potentially  you have accrued legal fees & other costs), the seller accepts a higher offer from someone else.

Higher Resale Value: With state-of-the-art appliances and security systems installed, your resale value will spike.

Flexibility

As a buyer who might want to live in a particular location or might not be ready to move home yet it gives you a lot of flexibility. For instance, if it’s January and your ideal home will be built in June but you’re not ready until December you could reserve a later plot.

Why you shouldn’t invest in an old build?

While settling for second best may be the best savings-centric approach, compromising on too many must-haves can lead to buyer's remorse or even lower the value of your property. Here’s what you need to know before investing in an old build: 

Difficult to sell

Older homes can be a turn-off for potential buyers, especially those buyers in the process of building a family. An old house could require extensive renovations to meet current standards.

Requires Remodeling

The current aesthetic that most homeowners want in their home is a large open floor plan with big closets, bathrooms, and bedrooms. Unfortunately, this was not the desire centuries ago when older homes were being designed and built.

Moving Appliances is an Issue

Older homes were built when household items were smaller than they are today. Long ago, homes were not built to contain commercial-grade double ovens or mammoth stainless steel fridges. Thus, the doorways were built much more narrow and shorter than they are today. It is best to measure all the doorways and other possible entryways before buying an old home. New doorways can be built, but again this is another cost to add to your ever-growing list. 

Roofs and Windows

Any roof that is older than 10-15 years will need replacement sooner than later. Older roofs begin to leak and crumble, thereby losing their insulation properties and causing more costly repairs. Older windows are usually single pane with very low insulating properties. Ancient windows equal a drafty home in winter and sweltering home in summer. Before buying an old build, put these two repairs at the top of your to-do list.

Expensive Home Insurance

Insuring an old home can be even pricier. They come with more risks and insurance companies are not willing to foot the bill for those unseen circumstances. Old wiring can be a dangerous fire hazard, old plumbing can pose major water issues, and crumbling concrete foundations can cause flooding and pricey structural problems.

Therefore, a thorough investigation is needed before buying an older home. Behind the beautiful facade, there can be a trainwreck of crumbling concrete repairs. Avoid falling into a money pit full of outdated plumbing, wiring and foundation problems.