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Old House vs. New Build?

When talking about investing in a property, some people are immediately drawn to newly-furnished, modern houses, and some yearn for the charm of old houses. If you are considering investing in a property in London or in the UK, then this is the article for you! This article breaks down the pros and cons for both newer and older homes to help you decide which one is more suitable for your investment.

The benefits of buying a newly built property are quite straightforward – nothing can compare to buying something brand new, being able to customise and decorate the house into your dream home.

  • It is satisfying to live in a newer home, especially if you are a neat freak – being the first to take a shower and sleep in the bedroom. And suppose you are a first-time buyer, with the government’s help-to-buy scheme. In that case, the financial burden on you is much more comfortable, the new-built house is such a perfect blank canvas to start your new life in.
  • Another advantage of new builds is they are a lot more energy efficient than older properties, often having better insulation and double-glazed windows and doors. This saves you a vast amount of money in bills and potentially the need for further improvements to make your home more environmentally friendly. 
  • Most new builds come with a guarantee from the builder company. The ten-year warranty and protection scheme helps reduce maintenance costs and stress, particularly suitable for investors who are thinking of letting out their homes.
  • If you are a young professional, part of a young family or plan to rent out your property to these groups, then new builds are suitable for you as they are specifically designed to fit for modern families. Most new houses have spacious open-plan dining-living-kitchen areas with fewer walls which provides greater accessibility for the occupiers and usually more desirable for families with young children. And an open-plan design allows natural light to flood into the room and make space seem more extensive and comfortable.

New-build sounds just perfect for you, right? However, apart from these great benefits that new builds can offer, there are also some disadvantages you need to consider:

  • Although new builds are designed to conform with the lifestyle of modern families, bedrooms and gardens are reduced in their sizes to accommodate a bigger for kitchen-living spaces. This is because developers believe, due to the change in people’s lifestyle, that younger generations would prefer to go out for fun other than have a sunbath and relax in the garden. 
  • Adjustments in regulation standards put new builds in a disadvantageous position when compared to old houses. The walls of most new homes are thinner: lightweight walls finished with plasterboard, meaning that you might be facing noise issues in the future with thin and hollow walls. Furthermore, the ceiling heights tend to be lower than period houses, so some have complained that they feel space-constrained in these homes because of this.
  • New builds usually cost, on average, 20% more than older properties and some benefits may be lost upon purchase. Its value depreciates on the day you buy the house as it is no longer considered ‘brand new’ and other buyers may choose to buy another new build over a second-hand new home. If you are thinking of holding the home for only a few years, it is essential to consider its future values.

Now, let’s talk about the charm of period houses! People have various opinions about purchasing old homes as an investment: some worry about the quality of these homes that were potentially many years ago, and others about whether there is any room for an increment in the value. In the UK, the market for older homes is enormous compared to newly built houses. For sure, you will reconsider your views on older homes after reading this section.

  • A significant strength of an older home is space. According to BBC: “the average size of a UK home – including both older and new-build properties is 85 sq. m. and has 5.2 rooms” whereas the average size of new homes “is 76 sq. m. and has 4.8 rooms”. As space can be such a scarce resource nowadays, for the same price, an older home is usually much bigger, including both internal and external areas (gardens, garages, etc.)
  • Older homes are a lot more suitable for car owners who live far from a central city. They have ample parking space and driveway.
  • Another charming feature of a period home is the uniqueness – in comparison to all similar-looking new-builds, period homes always bring some individuality,  like the symmetrical look of Georgian style and coloured bricks of Victorian style homes. The mixture of architectural styles in London attracts many people to live in London.
  • When comparing a new-built with an older home, which are both similar in size and location, then the older home has more potential to increase in value in the future.

If you think an older property sounds great to invest in, remember that there are also some drawbacks that you have to be careful with.

  • A common downfall of older homes is the need for renovations. You can always find yourself with some houseworks that might need to be done: cracks on the ceiling, or changing a timber under the floor, or even refurbishing the whole house as the design and decorations are usually old-fashioned. 
  • On top of repair and refurbishment, many old homes are much less environmentally friendly than new-builds; the old heating systems and thinner insulation layers can lead to higher energy bills and carbon emissions. 
  • Costs of renovation are high. For example, changing the central heating system for a 3-bedroom house will cost around £4000. From an investment perspective, although the old homes cost less upon purchase, they usually cost more in repair and maintenance.

There is no obvious winner between new-builds and period properties, it is all down to own personal preferences. It is best to stay open-minded to all options on the market, conduct thorough research and make accurate financial calculations before deciding to place an offer!

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Step-by-step guide to buying a home in London (and the UK!)

Are you a first-time buyer looking to buy a home in London? The process of purchasing property might sound complicated and daunting, especially during this particular COVID-19 period. Don’t worry, SearchSmartly has you covered. Here is our seven-step guide to buying a home.

Is buying a property worth it? Although 63% of people in the UK own property, nowadays, more and more young people believe residential property may not be a good investment anymore. People tend to have the misconception that you must own a house to ‘settle down’ or to have a family. But, is purchasing a property really the best option for you? 

Before you start your research, your occupation and commitment need to be considered. If you are a student or young professional, will you stay in London a few years down the line? Investment horizons must be taken into account whether you want to live in the property only for a few years, or decades, because the needs for them will be completely different. 

Commitment: will you do all the repairs yourself? Do you want to live in the same place for years or perhaps decades? For most people, purchasing a property is their biggest investment, so if you think the property market is not as stable as you’d like it to be, it is always a good idea to wait.

Having a clear understanding of your financial position is also essential. There is no harm in speaking to a financial advisor before you make a decision, especially if you want a mortgage loan. You don’t want to be looking for houses that are over your budget. It is a big financial commitment with ‘hidden’ costs such as stamp duty and solicitor fees, which can easily go beyond your budget. By setting a clear budget goal, you can find your dream home quicker and easier.

Think about where you want to live. There are 1000s of properties on sale in the 32 London boroughs, so how do you find your ideal property? SearchSmartly’s smart score system finds the property that matches all your preferences – no more stress from the enormous amount of information online about London areas. SearchSmartly generates recommendations based on your daily commute destination and what matters the most to you. And your time horizon of investment is the crucial factor in finding your dream home – if you are a young student and only thinking of holding your property for five years, factors like grocery stores and greater accessibility are more pivotal than infant and primary schools. If you are planning to stay in the same place for ten years or longer and ready to have a family, then the level of importance of schools near your property will be greater. 

You can always add the properties you like to create a ‘favourite’ list to share with others or come back another time. Remember, always be quick to request a viewing as properties go quickly!

Once you find your dream home, you will need to place an offer. Making an offer sounds very straightforward, but there are always more buyers than sellers. You need to make sure you are the most attractive buyer and here are some tips for that:

  • Build a good relationship with estate agents – it’s never a bad idea to have connections with estate agents, the more they know you, the more likely they will help you.
  • Get your finances in place before making an offer – you are in a more advantageous position when your finances are ready or if you’re a cash buyer especially if the seller is in a chain. 

After an agreement is made between you and the seller, a solicitor or conveyancer is needed to handle the legal process of transferring the ownership of the property to you. Some choose to find a conveyance firm before they put in an offer which can speed up the whole process, but it’s not a must. Conveyancing fees vary from firm to firm but they are typically between £850-£1500. Be aware that if you purchase a leasehold property, the cost is more than freehold properties. Leasehold is a form of legal ownership in which you have a lease from the freeholder to use the home for a number of years from 10 to 999 years. In contrast, with a freehold property, you own the building and the land, in perpetuity and never worry about paying annual grant rent or maintenance and service charges.  Your conveyance solicitor can also carry out some optional searches, for example, local authority searches, drainage searches and environmental searches. In total, these searches would only cost approx. £300; it is worth to get them all carried out before you encounter any pitfalls. 

Finding a surveyor to conduct a property survey for your house is not essential but advisable. If you need a loan, then your mortgage lender will do a mortgage valuation which provides the lender with independent confirmation of the property’s value. However, a property valuation is much less in-depth than a property survey as it only exams on the value of the house and is solely for the use of the mortgage lender. On the other hand, a property survey provides everything you, as a buyer, need to know about the property, from structural problems to small cracks on the wall and it highlights any potential issues in the future after you move in. The cost of a property survey varies from £500 to £2,000 based on the company, the size and the location of your property. Usually, the cost of a new-build property is much lower. With your survey, you can ask your seller to make reasonable adjustments to the price, for example, if there is a major structural problem, you can ask the seller to reduce the house price or request they fix the problem before you purchase the house.

Finally, the last step! The final step is coming to an agreement on a completion date with the seller. A completion date indicates the date you receive the keys. You should always check with your solicitor on a projected completion date before confirming an exact day with your seller. The completion date must be agreed before exchanging the contracts. And, finally, exchange contracts with your seller and become the legal owner of the property!