New Build Flats: Risk warning

JoeK_3

Beware of the potential downfalls of new build flats.


Any comments on the lack of performance?
Should we stay clear?
What are the downside risks?

JoeK

dolce_vita

There's too many of them and most of them are empty BTLs.

Personally, I think a lot of these developments will be the slums of the furure.

Here's a good article:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/23/cmbuytolet23.xml

Garnet_Gem

I don't think the soundproofing is ever good in new build flats. If you wanted a flat maybe an older well maintained building would be better.

Yasmin02

Hi

I renting a new build flat and to be honest I would never buy a new build flat after my experince. Where i live was built by Barratt and there are alot of problems with them. Firslty, we have problems with the electrics to the extent that last winter we came home had no power it turns out tat a box blew up on the ground just outside our flat. All of the materials they use are cheap ane nasty - all the window handles are not very nice. Then there are the cracks in the walls (lots of them). SO all in all I would never buy a new build. Lucky for me i am buying a nice victoria conversion!

Yasmin

alant1000

I've just bought a new build and am in the process of conveyancing - we'll be exchanging next week .

What i have found so far is that...

1/ New flats are sometimes / often slightly over valued - and can actually go down a bit over the first few years, if you take into accountinflation. i.e instead if going up 5% like others, they rise slower and might not even rise at all. To prove this, some developers will even sell you the flat at 2010 prices as a "perk" or incentive, as this is considered a downfall of buying brand new, just like a car really.

2/ The conveyancing process can take longer as all the initial boundaries / byways etc need to be established from scratch. For example ours has a private car park, which turns out not to be private from an old 1920's bylaw stating that it gives access to a neigbouring block of flats, even though its not a direct route.

3/ If its leasehold, the initial service charges will have to be estimated from scratch as well, as there are no costs to really benchmark against. Ours is £525 per year, and naturally this can go up next year if there are additional costs and outlays (although new builds have a 10 year NHBC warranty so its unlikely). The service charge fund rolls over into the next year if it is not all spent so eventually a large pot of money is held. When you move out you will obviously not be getting this back. If you moved into an older flat, this large pot of money woyuld have already been acumilated from previous tennants, so you tend to make a loss on this.

4/ You tend to get a lot of snagging issues with new builds, i had quite a long list, and made this a condition that it is fixed before i move in - this holds things up but its better to do this rather than just move in or you have no solicitor to help prompt them into action.

Apart from that in my eyes the benefits outweight the risks, no chain so a lot less risk, brand new kitchen which has never been touched, new carpets etc. I cant wait.

dmg24

alant1000 wrote: »

I've just bought a new build and am in the process of conveyancing - we'll be exchanging next week .

What i have found so far is that...

1/ New flats are sometimes / often slightly over valued - and can actually go down a bit over the first few years, if you take into accountinflation. i.e instead if going up 5% like others, they rise slower and might not even rise at all. To prove this, some developers will even sell you the flat at 2010 prices as a "perk" or incentive, as this is considered a downfall of buying brand new, just like a car really.

Slightly overvalued? Many are considerably overvalued, and you are likely to make a loss if you choose to sell over the first few years.

2/ The conveyancing process can take longer as all the initial boundaries / byways etc need to be established from scratch. For example ours has a private car park, which turns out not to be private from an old 1920's bylaw stating that it gives access to a neigbouring block of flats, even though its not a direct route.

No delay for me, I managed to move within three weeks. You just need a solicitor that is on the ball!

3/ If its leasehold, the initial service charges will have to be estimated from scratch as well, as there are no costs to really benchmark against. Ours is £525 per year, and naturally this can go up next year if there are additional costs and outlays (although new builds have a 10 year NHBC warranty so its unlikely). The service charge fund rolls over into the next year if it is not all spent so eventually a large pot of money is held. When you move out you will obviously not be getting this back. If you moved into an older flat, this large pot of money woyuld have already been acumilated from previous tennants, so you tend to make a loss on this.

You don't have any experience of management companies yet do you? My service charge has risen year on year, irrespective of the building warranty. The NHBC warranty actually covers very limited situations.

As for your second point, care to explain? How can you make a loss on something that has been accumulated from previous tenants?

4/ You tend to get a lot of snagging issues with new builds, i had quite a long list, and made this a condition that it is fixed before i move in - this holds things up but its better to do this rather than just move in or you have no solicitor to help prompt them into action.

Have you taken into account settlement, and faults that develop after you have completed? You are not the developers priority then.

Apart from that in my eyes the benefits outweight the risks, no chain so a lot less risk, brand new kitchen which has never been touched, new carpets etc. I cant wait.

Kitchen and carpets that you have paid a premium for (assuming that you have bought them from the developer), that will not be new when you sell.

I live in a new build apartment, although there are only two of us in the block (maisonette style). I have been very lucky (although I did a great deal of research before buying), and my property has increased in value (due it being quite unique in design) over the first year. However, every other design of new build apartment on the development has decreased in value.

The issue of noise is also an important consideration in apartments/ flats. I got to meet my new neighbours before moving in. They are fantastic, very helpful and very quiet. However, having lived in a flat for the past two years, I am all too aware of the upset that noisy neighbours can cause.

alant100, buying your first home is very exciting, and I really do wish you all the best in your new home. However, I do think that you are looking through rose tinted glasses at the situation? x

meanmachine_2

New builds - avoid.

Mansion flats in London / Edinburgh - OK.

Ideally always go for a 2 bed house with a bit of garden rather than a flat.

During the dog days of the last housing, er, blip, in 2005, there were propagandist articles all over the papers trying to persuade old people that "city living" was the thing for them.

Desperate.

If there is a downturn - and it seems to be happening in some areas already - new builds in towns and small cities will be hit hardest.

amcluesent

New build flats!

Shockingly bad build quality, everything is made to be "a mug's eyeful" of chrome, but the building is just plywood.

Noisy as heck. The 'drumming 'n' da bassing' will shake the whole building. Kiddies running wild on wooden flooring is hell.

BTL so quick turnover of tenants, all of the 'am I bovvered?' school of neighbour relations.

Big fall in values on the way, outside of London.

lush_walrus

Garnet_Gem wrote: »

I don't think the soundproofing is ever good in new build flats. If you wanted a flat maybe an older well maintained building would be better.

I'm not sure I agree on that point, part e building regs covers the passage of sound pretty well. It's been updated and updated, so the newer the flat the better the acoustics will be.

If it's in comparison to conversions, then again new builds will fair better.
In new builds prevention of sound is designed into the building and very simple to solve.

With conversions, it's generally more tricky. Sound finds the passage of least resistance, so if you are trying to deal with sound in retrospect (ie after the building has been built as is the case with conversions), then there are very often gaps and sound travels through (airborne not impact).

Anyway, back to the point! I think it all comes down to personal preference. New builds (as planners are keen to increase density) are generally smaller than conversions/older flats.

If you are in London (and most other cities are following suit), then flats that are being built now will not have parking (although those 5-10 years ago will) and as planning are keen to prevent people in areas with good transport links to not use cars you will also not be able to get a parking permit from that address.

I think the other point that might or might not concern you is that any new development over 13 units, is mixed tenure. Ie: Private will be mixed with part rent part buy and with housing association at approximately 50/50 mix. So, if that is something that may concern you, then it's worth finding out where on the development they are going to be.

JoeK_3

amcluesent wrote: »

New build flats!

Shockingly bad build quality, everything is made to be "a mug's eyeful" of chrome, but the building is just plywood.

Noisy as heck. The 'drumming 'n' da bassing' will shake the whole building. Kiddies running wild on wooden flooring is hell.

BTL so quick turnover of tenants, all of the 'am I bovvered?' school of neighbour relations.

Big fall in values on the way, outside of London.

New build price comparisons 2000 - 2006;

Property Type - Ave. Price Dec. 2000 - Ave. Price Dec. 2006 - % Growth
Old Flat - £104,886 - £190,110 - 81.25%
New Flats - £178,287 - £187,826 - 5.3%
All Flats - £111,687 - £189,695 - 69.8%
All property - £109,559 - £207,573 - 89.5%


Source: Land Registry Residential Property - Price Data (This is Money June 2007)


Will new build crash the most if it arrives?

JoeK

vansboy

Here in Luton, there is a new development, which has had several sales showing prices on Rightmove sold between £170 - £190,000 ish.

Now which would you choose, from these 2 options - remember, we're 1/4 mile apart....

NEW BUILD... up to £200,000

4 levels, 2 blocks each 60 or so flats. Option to upgrade kitchen ext & all un lived in. 1 allocated underground carparking space, no option for more spaces, no on street parking, on main thrtough road, or side street overlooking industry, or coincil/teraced house, lower priced housing. No garden areas to speak of. £???? annual charges. Lots looking for rental tenants.

BUILT 1960's ... £125-£140,000

8 blocks of 4 2 bedroomed maisonettes, in a cul de sac, way off the same main road, lots grass area, communal gardens, 70% owner occupied, none are overlooked & all have an established view of trees, or down into town. Some have garage, no allocated parking, on street parking is unrestricted, no permits or anything similar. Several of the flats are being brought up to date, by gutting them fully - ours is ALL new, throughout & NOT budget quality stuff!! Ground rent....£5/year - NOT a mstake £5!!!!

We think ours are bargains, even without feeling the new builds are too dear!!

VB