New Build vs old house, which one should you choose?

Key takeaways

• New builds avoid property chains, which can make the buying process smoother and more predictable. However, this doesn’t mean the purchase can’t fall though.
• Buying off-plan gives you extra time to save for a larger deposit and potentially secure a better mortgage deal if mortgage rates go down over time.
• Developers often offer incentives like cashback or upgraded fittings
• Renovation projects typically have lower purchase prices but require DIY skills or significant cash for improvements, while new builds offer a blank canvas without the need for immediate repairs
• New builds generally cost more than older homes, as they have a “new build premium”. This can mean their property value drops in the first few years of being owned, as they lose their “newness”.

New build vs old house

First, let’s weigh up the pros and cons of new builds and existing homes.

A new build avoids the stress of a property chain  🏠

One of the best things about buying a new build is that they don’t involve lengthy property chains. This means that no one is moving out of the house that you’re buying. When there are several buyers and sellers in a chain, delays can occur. If one person pulls out or their mortgage offer expires, this could see the chain collapse and multiple house sales fall through.

When you buy a new build, you can usually avoid chain-related drama, especially if you’re a first-time buyer and you don’t need to sell your existing home. However, there can be delays in other ways, for example, if the building work takes longer than expected.

Using sites like New Homes For Sale can help you find new builds in your area.

A new build gives buyers more time to save money 🏠

If buying 'off plan' while a new home is in progress, this could give you more time to save money. You’ll usually have to put down a small deposit to secure the property, but you won’t need to pay the rest of your deposit until you exchange contracts and complete the purchase.

If you’re able to save more money while you wait for the developers to complete the job, you could put down a bigger deposit and potentially access a better mortgage deal.

Related content: How much house can I afford?

A new build can offer developer incentives

Many developers offer incentives as a way to attract buyers. These might include cashback, upgraded fixtures and fittings. You could also use budget-boosting schemes to make affording a new build even easier.

Deposit Unlock, for example, allows you to purchase a new build property with just a 5% deposit. While with a Builders’ Gift, selected developers offer a contribution towards your house deposit. This is usually up to a maximum of 5% of the full property price, but it will vary depending on the home builder.

A renovation can mean a lower purchase price 🔨

If you’d like to buy a home on a very tight budget, an existing home could be the right choice. A property that needs a lot of work should be much cheaper than similarly sized properties on the same street.

If your budget is tight after covering your deposit and associated fees, there are still options available. You could choose to move into the property and fund home improvements gradually using their income. You'll need to carefully assess whether the property is liveable during renovations, as this will significantly impact your day-to-day comfort.

A renovation can reduce stamp duty costs 🔨

Stamp Duty Land Tax (SDLT) is a type of tax that’s based on the property’s price. If a house needs significant work and its price reflects that, the stamp duty bill may be lower than for a similar property that was newly renovated.

A renovation offers freedom to create a dream home 🔨

If you aspire to be a homeowner because you want the freedom to decorate and truly make a place your own, a renovation project could be highly fulfilling. With the right planning permission, you could even extend the property and make significant changes to its exterior or garden.

A new build provides an immaculate blank canvas 🏠

There's something appealing about moving into a house where everything is brand new and hasn't been lived in before. You won’t need to replace carpets, deep clean bathrooms, or caulk skirting boards.

For those wanting to paint walls and add personality, a new build can serve as a blank canvas. Most developers will allow you to choose the flooring, kitchen cupboards, and bathroom tiles as well.

Renovating a house can cost tens of thousands of pounds. In some cases, you might be better off with a new build... or at least an older home that has been well maintained by its previous owners!

Something to keep in mind is that although new builds are often marketed as luxurious and pristine, it’s common for them to have flaws. These are known as ‘snags’. Tell your developer if you spot any issues. They should send people around to fix the problem.

Don’t try to fix the snags yourself or hire someone to fix them. The purchase price includes quality workmanship, which should be delivered by the developer.

Related content: How to find a house

Do new-build homes lose value?

New build properties often command a premium price compared to existing homes of similar size because of their “newness”. As soon as you put your shiny new key in the door, its value will probably decrease for the first few years, because it is no longer ‘new’. If you're planning to move again within a few years, a significant fall in value could impact your ability to sell or remortgage, potentially affecting your future plans.

The good news is that the value of new build properties typically recovers within a few years and appreciates just like any other home.

Is it easy to get a mortgage on a new-build home?

The new build premium can make it harder to get a mortgage. Banks and building societies sometimes have strict criteria when lending on a new build property. It’s all down to the risks that come with securing a loan against a depreciating asset.

In the unlikely event that you stopped paying your mortgage and the lender repossessed the property, they may be forced to sell it for less than the original loan amount.

Putting down a larger deposit can provide you with a wider choice of mortgage lenders. However, options exist for those buying with a small deposit or no deposit at all. In fact, this is something we specialise in at Tembo. We help thousands of buyers discover their true buying budget through a range of buying schemes. Discover what options are open to you today.

Why do some buyers avoid new builds?

Some people dream of buying a brand-new home with immaculate furnishings. For others, though, a new build might not align with their preferences or priorities. This can be for cosmetic reasons, which we’ll explore below, but it may be a financial or legal decision too:

• New builds are often smaller than older homes. New builds are often smaller than older homes. Not only in terms of floor space and garden space, but they usually have lower ceilings, too.
• New-build buyers can’t always view the property first. If you’re buying off-plan, you won’t know exactly what you’re buying until you get your keys. You may have to settle for floor plans and digital drawings.
• New builds are often sold as leasehold. This means that although you’ll own the property itself, the ground it’s built on will be owned by a leaseholder. You’ll need to pay ground rent to the leaseholder, along with annual service and maintenance fees. These can vary dramatically depending on your chosen developer, the type of property you buy and the terms of the lease.

New builds can have less character. New builds typically don’t come with high ceilings, original fireplaces, and stained-glass windows. However, it is possible to add period charm to a new home over time.