Should you buy a newbuild home?

They are fresh, clean and convenient. But are they worth it?

Felicity Hannah
Friday 16 November 2018 14:10 GMT
You may not have to pay through the roof because newbuilds often come with discounts from developers
You may not have to pay through the roof because newbuilds often come with discounts from developers

We’re finally building more homes in Britain. Not enough – the government says it wants to see 300,000 new houses built every year by the mid-2020s – but construction has really stepped up.

Recent data released by the National House Building Council (NHBC) shows that more than 43,000 new homes were registered between July and September this year, that’s the highest figure since the global financial crisis. So there’s a definite hike in housebuilding.

And a lot of the money to pay for those new homes is coming from the government’s help-to-buy equity loan scheme, which is to continue running until 2023. The scheme allows people to buy a newbuild home with a deposit of just 5 per cent and a government loan of up to 20 per cent.

However, there’s no clearcut case that buying a newbuild is comparable to buying an older property. Some people argue it’s worse; an overpriced and risky investment that may be a struggle to sell. Others say it’s a wonderful way to own a home, where the buyer can tweak and perfect the house and make it truly their own.

With so many first-time buyers and second-steppers being encouraged to look at newbuilds thanks to government support and the shortage of properties on the market, we’ve been asking if they are a good or bad investment.

The good

Jonathan Stephens, managing director of Surrenden Invest, says there are strong financial incentives to buying a newbuild, and they can make a real difference to how affordable homeownership is.

“Developers are often happy to offer a larger discount than private vendors,” he says. “For those buying in London and the surrounding area, the government’s help-to-buy scheme can also be particularly useful for first-time buyers.

“Newbuilds also come with peace of mind, in the form of the NHBC (or equivalent) 10 year warranty, which covers everything structural – from plumbing and wiring, to the roof. The appliances will also have their own warranties, usually for at least two years.”

And, of course, a new home is rather pleasant. It’s clean, it’s fresh and there’s no urgent need to spend even more money as soon as you move in chucking out the avocado bathroom suite. If buyers begin the process before the home is finished, they can even personalise how it’s decorated.

It’s also important to remember a newly built home benefits from all the latest energy efficiency technology, usually making them far cheaper to run than older housing stock.

Research carried out by the Home Builders Federation shows that more than eight out of 10 newbuild properties have the top A or B energy performance certificate rating, compared with just 2.2 per cent of existing properties.

That means newbuild homeowners will spend an average of £443.30 a year on energy and heating, less than half the £1,072 a typical older home costs to heat and power.

The bad

While there are some strong financial incentives for buying a newly built home, there could also be a significant downside.

Elliot Castle, CEO of, says: “Newbuild homes are as attractive as their computerised brochure images, however they come with a premium price tag. Just like buying a brand new car, the price of a property depreciates the minute you move in and they tend to only hold their price if you live in them for long enough.”

A common complaint with newbuilds is that the rooms are small, as developers work hard to include price-boosting amenities and a greater number of bedrooms.

Research from LABC Warranty published earlier this year showed that newbuild living rooms are almost a third smaller than similar homes built in the 1970s, and a study carried out by the University of Cambridge recently found that 55 per cent of UK dwellings fall short of the accepted internal space standard.

In fact, the UK has the smallest homes by floor area in Europe; the average newbuild home in this country is just 76 square metres compared with 137 square metres in Denmark.

Sam Mitchell, CEO of online estate agent, says: “Developers are looking to maximise their profits, and that means bedroom and living room spaces are likely to be squeezed. Newbuilds often have smaller gardens, so that more properties can be packed onto a development.

“As for the hassle-free side of buying new, that doesn’t mean when you move in things won’t go wrong. It’s not unusual to end up with quite a long snagging list – such as cracks in plasterwork, appliances not working, loose bathroom tiles – to hand to the developer to sort out.”

The ugly

It was recently revealed that the government will launch a “Building Better, Building Beautiful” commission to ensure new developments are attractive and fit in with the character of existing communities.

But some commentators aren’t convinced. Writing in the publication Building Design, Julia Park, head of housing research at Levitt Bernstein, commented: “According to the government, ‘The commission will raise the level of debate regarding the importance of beauty in the built environment’.

“What it didn’t say is that alongside this they intend to get as many new homes built as possible without imposing any constraints on how they look, how they work or whether communities want them.”

As the country struggles to build the homes it needs, there’s certainly an argument that such concerns as size and character may be sacrificed for the goal of getting more units to market, without a focus on quality as well as quantity. But then existing properties could need more work and may well have higher energy bills.

Whether it’s a newbuild or an existing property, there’s an awful lot to keep the buyer on their toes.

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