Pros and cons of new build homes

It’s one of the topics that Hubby and I discussed back when we were looking at buying our first home together. Thought it might be useful to share our thoughts on the blog!

We decided to increase our options so we looked at both new builds and existing homes, as long as they fit in our list of criteria. More on this in an older post! In the end, we made four offers and actually the first two were on existing homes. 

I would love to hear your thoughts too so please do leave a comment below!

Pros

1. Chain free

A property chain is where there is a sequence of property transactions which are linked as the outcomes impact the other transactions in the sequence. 

As an example, let’s say there are two property transactions:

• There is a seller of Property 1 (Party A) and a buyer of Property 1 (Party B).
• Party B needs to sell their home (Property 2) in order to finance the purchase of Property 1 so are selling to Party C.
• To keep things simple, we can say Party C is a first time buyer so they don’t have to sell a property to finance the purchase of Property 2.

This is a sequence of transactions as the sale of Property 2 needs to be completed so Party B can finance their purchase of Property 1.  As a result of this chain, there are multiple parties involved and may be more likely to cause delays as there are a number of factors which impact the transactions.  

For instance, if Party C is unable to obtain a mortgage at the agreed price for Property 2, then this could cause the chain to fall apart or cause delays as Party B may need to find a new buyer for their home.

We were looking to move quickly and was hoping a simpler chain free transaction might also help to reduce the likelihood of the purchase falling through. You can read more about property chains here.

2. New home warranty

A new home warranty such as the NHBC warranty would give us some peace of mind.

3. It’s brand new and ready to move in

We liked the idea that we would be first people in the home and that we would be able to move in straightaway without having to do any work to the flat.

4. Fewer problems with the home

We were hoping that there would be lower repair costs initially since everything would be new and there wouldn’t be hidden issues.

5. Personalise the home

I had seen that some developers give the option to customise the new build so the buyer can choose, for example, the flooring and fittings! This way you can personalise the home before even moving in.

6. Help to Buy: Equity Loan and Shared Ownership schemes

These schemes are only available for new build homes.

7. More energy efficient

According to this HomeOwners Alliance article:

‘Data from Energy Performance Certificates shows over 80% of new homes have the highest A or B ratings. That compares to just 2.2% of existing properties.’ 

A more energy efficient home can mean lower bills!

Cons

1. Snags and defects

I thought there are minimal issues with new build homes but as you might have read in my earlier posts, we still have had issues and one was a gas leak.

I have several posts on snags and so I’ve created a label in the side menu named ‘Snagging issues’ so if you click it, all the snagging related posts will come up!

2. New build premium

New build homes tend to be more expensive than similar existing homes so don’t forget to do research about property prices in the area you are looking to buy!

PropertyWire had a recent article about the widening price gap between existing properties and new builds.

3. Building work delays

A colleague was buying a new build home but faced months of building work delays and later decided to pull out of the property purchase because of the delays.

4. There might not be many new builds in the area that you want to live in

We had found an area in London that we really liked but there weren’t many new builds in the area. The new builds that were available were way out of our budget!

5. Mortgage valuation may not meet the agreed purchase price

A relative previously bought a new build home but when they obtained the mortgage valuation, it was lower than the agreed purchase price and they ended up having to make up the difference as they were unable to renegotiate on the price with the developer. However, after reading this Which? article, down valuations also impact existing homes.

6. Unable to see the finished property if buying off-plan

If you are buying off-plan, you won’t be able to see what the finished home is like and so would be reliant on the show home and marketing materials. HomeOwners Alliance has a guide on buying off-plan!

Additional links:

Here are some useful links below on new builds vs older homes:

Zoopla: New build homes versus older homes

HomeOwners Alliance: New Build vs Existing Home – Pros and Cons

If you find the blog posts useful, please do share with others!

Jess