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The Hidden Risks of Buying a New Build: What You Need to Know


When considering stepping onto or climbing up the property ladder, the allure of a new build can be tempting. With modern amenities, brand-new appliances, and pristine conditions, new builds seem to offer a hassle-free home ownership experience. However, it’s essential to tread carefully and be aware of the potential pitfalls that come with purchasing a new build. At Fisher Wrathall Surveyors, we understand the intricacies of the property market and offer services such as new build snagging surveys to help you navigate these challenges.



Depreciation and Negative Equity

One significant concern with new builds is the risk of depreciation and negative equity. New-build homes often come with a premium price tag. While they may maintain their value for the first few years, they tend to depreciate more quickly than older homes after around three to four years. This depreciation can be particularly problematic if you have a high mortgage loan-to-value (LTV) ratio of 90-95%. If the market slumps or you haven’t built up enough equity, you may find yourself in negative equity, where the value of your home is less than your mortgage.



Quality Concerns and Snagging Issues

Another common issue with new builds is the quality of construction. According to a survey by the Chartered Institute of Building (CIOB), almost a third of people described new builds as poor quality. Many new builds come with “snags” – small issues such as doors not shutting properly or minor leaks. While developers are typically responsible for fixing these snags within the first two years, it’s crucial to have a snagging survey carried out by an independent expert. This survey will ensure that all issues are identified and addressed before you move in.



The Illusion of Perks and Incentives

House-builders often offer enticing incentives to sell their new developments, such as paying stamp duty or legal fees, or providing free white goods, carpets, parking spaces, or garden landscaping. However, these perks can sometimes mask the true value of the property. Developers prefer to offer incentives rather than reduce prices, which can leave you and your lender at financial risk if house prices fall. It’s essential to critically assess these incentives and consider their long-term value.



Energy Efficiency and Modern Amenities

On the positive side, new builds are designed to meet high energy efficiency standards. Data from Energy Performance Certificates (EPCs) shows that over 80% of new homes have the highest A or B ratings, compared to just 2.2% of existing properties. This means lower energy bills and the potential for green mortgages with cheaper rates. New builds also often come with modern technologies such as condensing boilers, double or triple glazing, increased insulation, and solar panels, which can lead to significant savings on utility bills.



Customisation and Low Maintenance

New builds offer the advantage of customisation, especially if the development is still under construction. You may have the opportunity to choose the position of cupboards, the colour of kitchen worktops, and other fixtures and fittings, saving you money on redecorating. Additionally, maintaining a new build is generally less expensive than an older property, as it shouldn’t require major repairs in the short to medium term. Many new builds come with warranties, such as those from the National House-Building Council, providing cover for structural defects for up to 10 years.



Conclusion

While new builds offer several benefits, including energy efficiency, modern amenities, and low maintenance, it’s crucial to be aware of the potential risks. Depreciation, quality concerns, and the illusion of perks can impact your financial situation and overall satisfaction with your purchase. At Fisher Wrathall Surveyors, we offer new build snagging surveys and other services to help you make informed decisions and protect your investment.

If you are considering buying a new build, contact us today to learn more about our services and how we can assist you in navigating the complexities of the property market. Visit our website at fwsurveyors.co.uk or give our team a call on 01524 900955 for more information.






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