NEW BUILD PROPERTIES

Investor Heaven or Minefield!

LET ME INTRODUCE MYSELF

LET ME INTRODUCE MYSELF

My name is Michael Hoad and I’m the director and founder of Hoad

Realty London’s premier home buying agency. My passion for property

started in 1995 when my Uncle and mentor hired a buying agent to help

him purchase investment property abroad. The buying agent found an

exceptional property that turned out to be a great investment and I

became interested in acting for the buyer. l founded Hoad Realty to assist

people in buying property in London, having lived in London my whole

life I have extensive knowledge of the London market.

AN OLD DEBATE

An old debate in the property industry is whether or not to buy

new or old build properties.

Some investors will never go near the 1000s of new developments

in London, whereas others have invested and made good returns in

these modern properties.

The truth is new and old build properties both have their

advantages and disadvantages for the buyer.

NEW BUILD ADVANTAGES

Warranty - Many new homes come with a 10 year warranty on building work by

companies such as the NHBC (National House-Building Council). This insurance covers

you if anything goes wrong with the structure or building work of the property which

would be costly to repair if they happened on an old build that didn’t have a warranty.

Energy Efficient - Most new build properties are extremely energy efficient. A lot

of the new developments in London are designed to have more incoming natural light

than older properties. Plus they will all come with double glazed windows and an energy

rating certificate. Cheaper to run than their older counterparts.

NEW BUILD ADVANTAGES

Secure and Safe - New homes are built with security and safety

in mind. They are often more fire safe than older homes and they may

come with security systems, burglar alarms as standard.

Modern conveniences - New homes will often come with high-

spec appliances and conveniences. This includes up-to date heating

systems and insulation.

NEW BUILD DISADVANTAGES

Slick Marketing - New build properties are made by huge development companies. They’re

goal is to make a profit off each unit and they’ve done they’re numbers in advance. Often you

will be dealing with a lot of slick marketing and there is a member of the team to transition you

along every step of the way right through to completion. It’s hard to get a good deal on

properties of this kind

Over Exaggerated Yields and Growth - Many new properties boost of great rental yields

and capital growth as if it were a sure thing. Often the marketing companies working for the

developers will over estimate yields and capital gains as part of their sales pitch. It’s best to do

your own research in the area and also consider how many new units are to be built in that area

NEW BUILD DISADVANTAGES

Most professional landlords don’t buy new - The sales and marketing teams involved

make it almost impossible to get a property under market value. Therefore, most people that do

buy new are going to live there themselves rather than make it a buy-to-let property. That isn't to

say that you cant rent these out, it is just that you will probably find a much better deal if you buy

an older house from a private seller.

Teething problems - Many new build properties have teething problems. Although your

warranty covers your new property the reality of claiming on this can be quite different than was

first agreed. You’ll often hear contractors say that craftsmanship has declined with new building

techniques and older homes are built to stand longer than new homes.

OLD BUILD DISADVANTAGES

Structural Issues - Many of the properties in London are built on clay, which is

subject to swelling and shrinking. Some older Victorian era properties in London were

built with shallow foundations on this clay and this can lead to structural problems such

as cracks appearing in the walls. These structural flaws are something that you wont see

with modern properties.

DIY - Structural work on older property can often a lot more complicated than it

first appears. Planning permission is notoriously hard to get in the UK just ask any of my

architect friends. The budget of the work can often go well over your first estimate and

the whole thing can turn into a nightmare.

OLD BUILD DISADVANTAGES

Damp - New builds are made to be fully breathable and moisture will

pass through the structure. Older buildings however, may have problems

with allowing moisture to pass through the building. This can result in

damp which can cause all type of problems for the inside and outside of

the structure. Damp can cause window frames to rot and mould to build

up in the property. It’s a serious problem if the property has a damp

issues and something that can be an issue with older homes.

OLD BUILD ADVANTAGES

Better Craftsmanship - In the car industry many experts will tell you that older cars were

made without the companies future profits in mind and therefore the cars were built to last

longer. Now however, many cars are built to eventually become obsolete so that you have to buy

another. The same can be said for properties and if you find an old property that has been build

with excellent craftsmanship it can out live newer developments.

Character - Older properties often have more character than new builds. Modern

complexes can feel like beehives with no established shops and local sights. Older properties

come with their own history and unique character, which can feel a lot warmer than new homes.

They will also come with an established set of neighbours and community that new builds wont.

OLD BUILD ADVANTAGES

Negotiating power - When you’re looking at older properties

more often than not you are dealing with regular people outside the

property industry. You are much more likely to get a deal under

market value and therefore make an immediate profit. Also, if the

seller is in a position where they need to sell you can get an even

better deal. This will almost never happen with a new property.

SO OLD OR NEW?

The truth is there is no clear-cut answer as to whether to buy old

or new build properties. However, I’ll leave you with some words

from Gerry FitzGerald, who is a very successful landlord and

property author. What does he say about the debate between new and

old builds? “Professional Landlords don’t buy new”.

WE’D LOVE TO HEAR FROM

YOU

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Phone: 020 7692 4334

www.hoadrealty.com

info@hoadrealty.com