We’ve all heard how when you buy a new car, it falls in value by thousands of pounds the moment you drive off the fore court. The same applies to the moment you step into a newly built home, because as soon as you’ve moved in and made your mark, it’s not a new home. There’s evidence of this in the history books, when in the past new build houses have fallen in price quicker than other properties, and rose in price slower.
Another good indicator is how mortgage lenders view the situation. Although they have made a lot of silly mistakes in the past, this is an area they have always been cautious of. Most lenders are more restrict on the loan-to-value on these properties, and in particular newly built flats, where loan to value limits can be as much as 20% less than an older property.
On the plus side, I can see why they are attractive to a lot of people. Like with anything, we would rather not have second hand goods. There shouldn’t be any faults or things you need to repair, or any dodgy decorating by the previous owners which you need to go over. You have a blank canvas to do what you want with, and put the way you like it.
One thing to be cautious of, is when you look around the area, it may look quiet and peaceful, but that may only be because your future neighbours are not there yet. Usually if you are moving somewhere different in your home town you know what you’re getting, but when there’s lot of empty properties it is a bit of a lottery.
There are lots of schemes the government have introduced in order to assist first time buyers. You are able to save just a 5% deposit, then take two 10% low interest rate loans from both the government and the builder in order to give you 25% to put down towards a mortgage. For some, this can be just the ticket they need in order to get onto the housing ladder, and at what would be a much lower monthly payment than if they had obtained a 95% loan to value mortgage.
Although schemes like this are helpful for both first time buyers and builders alike, in my opinion they actually slow down the housing market. First time buyers are the fuel of the housing market. They are usually the first in a chain, and just one first time buyer coming into the market can mean tens of others can get moving above them. So by directing those first time buyers towards properties which have no chain about them, the fuel supply is being cut off.
Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in mortgages. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde DipPFS
11th June 2012
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