Buying a new-build home - the pros and cons

new build homeMany people dream of living in an older property – be it a Georgian townhouse or a quaint country cottage. They can certainly make beautiful homes, but if you speak to people who own a character property they'll often warn you that maintenance can be a big issue – and a whopping great expense.

So is it wise to shun period features in place of a modern, newly built property, designed for 21st century living?%VIRTUAL-SkimlinksPromo%
In with the new
Not everybody finds old properties charming. After all, they are by definition more well-worn than new builds.

That wonky floor that one person finds characterful is simply a hazard to another. And the original sash windows that some people find 'oh-so-charming' are just draughty and inefficient in the eyes of others. Houses, like everything in life, are horses for courses.

However, one indisputable fact of homebuying is that it's expensive and many people look to minimise ongoing expenses by avoiding properties that will require a lot of maintenance. And as a rule of thumb the older the home, the more maintenance it will require.

On the other hand new homes give the buyer a certain level of reassurance. For a start they usually come with a 10-year National House Building Council's Buildmark warranty, which covers a wide range of defects, from problems with a property's foundations to the double glazing.

They are also less likely to suffer from problems by virtue of the fact that everything is so new. The windows shouldn't be draughty and the boiler shouldn't be faulty – and even if it is, it will be under guarantee. While it is common to hear people say 'they don't build houses like they used to', it's also a fact that building regulations have been strengthened over the years and that means new build homes should be less likely to suffer problems that period properties.

Pick your own
Even better, everything is brand spanking new in a newly built home, and if you buy it 'off-plan' before it's completed you often get to choose your preferred colour schemes and some fixtures and fittings.

They also tend to be built specifically to be energy efficient and are therefore cheaper to run than older homes, which can make a huge ongoing difference to your gas and electric costs.

Finally, remember that new build homes are chain free, which may not be a deciding factor in your choice of a home but is a huge benefit for many. It means the purchase has far less chance of falling through and should go through quickly.

Giles Hannah, managing director of VanHan, an expert in new development London sales, says: 'Off-plan new-build sales are becoming popular once more. Many buyers prefer new-build properties because they are well designed for today's living and benefit from air conditioning and good insulation."

He continues: "Ultra-modern interiors are attractive to buyers, while they can often have a say on the detail and colour schemes, avoiding the need to redecorate as soon as they move in."

These modern, easy to manage homes are good for lots of different buyers, but particularly first-time buyers who don't want and can't afford to renovate their first home, families without time for heavy maintenance, landlords who want to let the property quickly, and older buyers who are looking for a home that is easy to clean and look after.

But no matter how practical they might be, for some buyers new builds are a total turn-off.

Downsides of new builds
Some people just don't like the appearance of newly built homes and wouldn't consider living in them.

Others consider them too small, too boxy and with tiny windows that don't let enough natural light in, as well as plasterboard internal walls that allow sound to travel too freely.

Some of these criticisms are valid as new homes often do tend to be smaller than period properties. Indeed earlier this year the Royal Association of British Architects said that we are building cramped tiny homes, claiming that at 46 square metres, the average new one-bedroom home in the country is no bigger than a tube carriage. At the same time homelessness charity Shelter complained that in the UK we are building the smallest new homes in Western Europe.

Some fans of period properties believe that new builds are not financially attractive. They reason that it is harder to make money on a new build because you buy the property at its peak, when its 'newness' is its unique selling point. Like driving a new car out of a forecourt and seeing the value depreciate, the newly built premium disappears once you have lived in a home.

With an older home you have a lot more scope to make significant home improvements and therefore potentially increase its value.

Of course, the type of property you prefer is a personal choice, but if you do want to opt for the ease of a newly built home, how easy is it to get a mortgage?

Mortgage matters
Most buyers of a newly built home shouldn't have too much of a problem getting a mortgage, especially if they are looking at a house. Those buying a new build flat may find that some lenders are cautious about lending, in particular because it can be difficult for them to establish a 'true' value of a flat in a newly built block where lots of similar properties are also currently for sale.

Some lenders are still smarting from the excesses of the boom years, when it transpired that many new build flats had been massively overvalued, only to leave buyers in negative equity during the recession – indeed many still are.

As a result lenders often restrict lending on new build flats, such as demanding a larger minimum deposit than with a previously owned home, or imposing a maximum amount they will lend.

Mark Harris, chief executive of mortgage broker SPF Private Clients, explains: "When purchasing a new build, the type of mortgage won't be affected so you will be able to access the usual range of fixes or trackers, but the maximum loan-to-value might be an issue. If you are buying a new-build house, you should be able to borrow up to 90% of the property's value but this falls to 85% on flats and 75% if you are buying it as an investment property."

10 top ways to add value to your home
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Buying a new-build home - the pros and cons

Of course with all these things, the value it adds depends on the property you have to start with, and the kinds of improvements you make, but Which? estimates the cost of a new kitchen at £8,000 and HSBC calculates the added value to your property at £4,500 - which is a clear loss.

This has been done by 41% of people in the last three years, and 29% of people plan it in the next three. It's cheaper than a kitchen, and Which? estimates the cost at £3,000. This is roughly the same value that HSBC says it will add to your property - so you'll break-even.

It may be difficult, but getting your property ready for sale means depersonalising it. 

Clutter can distract viewers and more than half (60%) of the property valuers who took part in the 2012 HSBC Home Improvement Survey said that the number one way to increase a property's chance of selling quickly, and for a good price, was to de-clutter.

This has been installed by 31% of us in the last three years, and 15% plan it in the next three. Installing central heating is a disruptive job, and according to WhatPrice it will cost you around £3,235. However, this is the first of the top ten to actually pay off. Property expert Phil Spencer says it will add £5,000 to the value.

A quick splash of paint can work wonders on tired-looking walls, and sticking to neutral tones is the safest bet.

Keeping the colour scheme simple, fresh and inviting will help potential buyers to see themselves living in your home.

Some 18% have added one in the last three years, and 30% will in the next three. This is another huge job, but with more people struggling to move and deciding to improve instead, it's increasingly popular. The amount it costs will depend on an enormous number of things, from the area you have to work with, to the size of the extension. However, assuming you add a single room you could spend around £20,000. HSBC estimates it will add around £15,500 to the value of the property, so you are unlikely to gain as much as you spend.

According to Halifax valuers, loft conversions - which require lofts with a roof height of at least 2.4 metres - are a good way to increase the potential sale price of your home.

Be sure to stick to your budget, though. The average loft conversion will cost between £10,000 and £30,000, while HSBC's figures show that they typically add £20,876 to the value of a property.

Putting in new windows adds around £5,265 to the value of the average property and can reap big rewards when it comes to energy efficiency.

It is, however, sensible to ensure that your new windows are in line with the style of your property to maximise the added value - particularly as putting them in can set you back about £5,000.

Off road parking or a garage can be especially advantageous in areas where parked cars line both sides on the street.

Nationwide's figures show that adding a garage, which can cost anything between £8,000 and £25,000, can increase the value of your property by 11%.

Outside space is just as important as inside - especially when people are seeing your home for the first time.

While 63% of the HSBC survey expert respondents said that repainting or varnishing a front door would make a difference, only 23% of homeowners recognised this. Peter Dockar at HSBC said: "It is often the smaller jobs like painting the front door that can make all the difference when looking for a sale."
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