From Nine Elms in South West London to the Southbank, there were 41,222 new homes registered in the second quarter of 2016, with a million more promised nationwide by 2020. It’s often said that investing in new builds is an easier option, but complications can arise. Here’s what to watch out for.
1. Do you really know what you’re buying?
If you buy before a building is finished, the likelihood is that you’ll be shown a brochure or a show home to give you an idea of the final space. But show homes are exactly that – for show. Modern homes tend to be built on the small side, and some developers are quite capable of using tricks – such as using scaled down, artfully arranged furniture – to make the space appear larger than it really is.
2. Completion dates can drift
Many people buy new builds off plan with a specified completion date. However, it’s not entirely unusual for that date to be put back – sometimes several times. In some cases a sale falling through can actually work to your advantage – especially if property prices fall and buyers are able to walk away and invest more effectively elsewhere – but it can also feel like a frustrating waste of time and energy.
3. Watch out for service charges
A recent Direct Line survey revealed that service charges are generally double on a new build compared to older housing and can cost property owners thousands of pounds a year. Unsurprisingly, the more amenities you have – from gyms to concierges to communal gardens – the higher you can expect the service charges to be. Costs vary greatly between developments, so make sure you ask for a thorough breakdown of what you’re paying for.
4. You’re competing with your neighbours
It’s sometimes hard to remember that you’re not the only person investing in a particular building. And where there are multiple apartments to buy, there are also multiple apartments to be sold on. The danger is that when you come to sell so will your neighbours – and a crowded market is always to the buyer’s advantage.
5. It won’t stay new forever
We can all understand the appeal of unlocking the door to a pristine, shiny new apartment, but the problem is, as with all things, newness has a shelf life. So while you’re likely paying a premium for being first through the door, that value will disappear the moment you sell it on – and it becomes the same as any other property.