Should you, as a landlord for buy to let or for personal occupation, buy a brand-new home?
Well,
let’s start by looking at the numbers …
Over the last 10 years, 2,743
new homes have been built in the Southampton area
That
is a lot of bricks and mortar! Roll the clock back twenty years in the Southampton
property market, and there were two distinct camps of property buyers - folks
who would only contemplate living in period character properties with their
original fireplaces and beams, and those people who preferred the low maintenance
of a new home. Old period homes were ridiculed as money pits by new-home aficionados,
while new-home owners were accused of buying boring boxes, all vanilla, all the
same, homogenous and bland.
However,
it’s not as black and white as that anymore – or not as I see it in Southampton.
New homebuilders are now trying to change their cookie-cutter uniform rows of
suburban boxes into developments that are as individual as the families that
love in them, thus increasing their appeal. Nonetheless, whether you choose a stone
cottage, archetypal Victorian semi or terrace, 1970’s/80’s functional home or a
untouched new home, whatever home you buy, it can result in supplementary costs
that are often not taken into math’s when buying by potential homeowners or buy
to let landlords.
So
looking at the numbers in greater detail, let’s see what type of new homes people
have been buying in Southampton and the wider local authority area ..
Number of New Homes Built in Our Local Authority in the last
Decade
|
New Homes Built in Our Local Authority in the last Decade as a
Percentage
|
New Homes Built Nationally in the last Decade as a Percentage
|
|
Detached
|
86
|
3.1%
|
29.2%
|
Semi
|
100
|
3.6%
|
21.9%
|
Terraced
|
362
|
13.2%
|
26.6%
|
Flat
|
2,195
|
80.0%
|
22.3%
|
I
thought the mix of what was built/bought locally over the last 10 years when
compared to the national figures was fascinating … it’s interesting (but not
surprising) to see a greater proportion of flats built locally and fewer detached
homes being built, when compared to the national averages. This is because of
the nature of the Southampton area, its position in the country, the
availability of building land, planning restrictions by Southampton City
Council and the price of building land.
So, should you buy a new home (because a lot of people locally have over the last ten years)?
Well
if you are considering new, take care when buying one, as often the show home
isn’t the actual property you end up buying. It’s like visiting the car
showroom and falling in love with the model in the showroom (which is spec’d up
to an inch of its life) – only to get the base model when handed the keys. Look
out for things like curtain rails, tv aerials (or lack of them), kitchen
appliances, carpets and curtains … and outside – make sure you aren’t
unwittingly buying a square piece of earth instead of the manicured landscaped
gardens.
New
homes are a lot more efficient on energy consumption compared to the old
drafty, high fuel bill Victorian semis, as their owners can testify. Older
properties will have maintenance issues, with 100yo brickwork and roofs that
might need replacement and extra insulation, rotten wooden windows and a dodgy
central heating boiler (all sounding
rather a strain on your bank balance if you weren’t aware). The point I am
trying to get across is open your eyes and don’t assume .. ask questions and
get a surveyor to make a detailed inspection of the property so you know what
you are getting yourself into.
Next,
I also wanted to break down the new home stats to each individual year in our
local area to see if there was a pattern to when people bought a new home. As
you can see, there was a drop in new homes selling in the Credit Crunch years
(2009 to 2010) and since then; the general trend has been better! Looking at
the much larger second hand housing market in Southampton over the same 10
years, the coloration between the new homes market and second market has been
quite strong – which shows the new home builders don’t make (or break) the Southampton
housing market – just follow it (although
with the planned building locally in the next 10/20 years
– who knows if that will continue to be the case?).
So, should you buy brand-new or second hand? If price
is your sole motivator, then new homes are always CHEAPER when the economy is
bad. However, in normal and good housing market conditions, you will pay a ‘new
build premium’. The Royal Institute of Chartered Surveyors admits that this can
be as high as 10% extra, when compared to a similar second hand property – so
be aware of that (it’s like paying extra
for a new car and losing a bit (or a lot) of money as soon as you drive off the
forecourt). Although, it’s not always about pure pound notes.
Older houses are bigger (more room) yet take more
money to heat. Older houses have bigger gardens (to enjoy) – but you will spend
more time tending to them. Older houses are in more established areas (with
more facilities), whilst everyone is starting afresh on new homes. It all comes
down to personal opinion. One final thought though, at least with new homes
there is no gazumping or no upward chain to ruin any sale completion dates …
The choice as they say … is yours!
If you are a Southampton landlord, irrespective of whether you are a client of mine or another agent in Southampton (or even you do it yourself), feel free to drop me a line or pop into the office for an informal chat on the future direction of the Southampton rental market and where opportunities may lie.
If you are looking for an agent that is well established, professional andcommunicative, then contact us to find out how we can get the best out of your investment property.
Email me on brian.linehan@belvoirlettings.com or call on 023 8001 8222.
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The blog is good enough, keep up writing such type of posts.
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