new-build bills

High energy costs could mean savings of £5,000 if you buy a new-build

Savills has done the research on how much you can really save if you buy a new-build compared with an old home, as energy prices continue to rise.

Investing in a brand-new home has become even more popular in 2022, with new-build reservations up by 7% in the first quarter of the year compared with Q1 2021, according to Savills. Compared to before Covid, there’s been a huge 41% rise in this arena, demonstrating the growth in desireability.

Some of this could be down to a lack of larger existing properties coming to the market for sale, meaning buyers and investors are opting to reserve up-and-coming homes instead.

Yet another major draw, particularly as energy bills have famously been on the rise and could continue to climb further, is the energy efficiency of brand new properties. With that, of course, comes big bill savings, but how does it even out compared to the cost of purchase?

Second hand or brand new?

Using a combination of energy performance certificate (EPC) and HM Land Registry data, Savills has released figures of the projected cost comparison between owning a new-build and a second-hand home. On average, it finds that owners will save £4,900 with a new-build over five years.

Energy prices increased by between 54% and 96% in April 2022 when compared with a year ago, says Savills, with predictions that bills could increase by another 32% when the energy price cap is raised in October.

It’s no secret that new-builds on the whole have much higher energy efficiency scores than older properties, and it has already begun to affect property investment trends. They are built to modern standards, with more energy efficient fixtures and fittings.

According to the research, this could save an average of 55% – or £983 – per year based on the cost of lighting, heating and hot water. This rises to 59% for a detached home, and is more like 37% for a flat.

Breaking down the figures for flats, as an example, the most common EPC rating for a new-build flat is B, with projected core energy costs per year sitting at £596. For an existing flat, the average rating is a C, with bills costing £939 per year – meaning savings for the occupier of £344.

Larger homes tend to also have EPC ratings of B when they are newly built (although some of course will have higher A ratings), but the average for an existing larger home falls to D, meaning much higher bills generally.

New-build benefits

Buying a new property comes with a range of pros compared with an older home, and this applies to both owner-occupiers and investors who intend to let out the home.

While there is often a price premium on brand new homes, as the figures above show, this can be outweighed over time by the energy savings. For rental properties, low energy bills can be a key selling point to entice more tenants and create demand for the property.

Sometimes, developers offer certain discounts on new-builds, too, such as early bird offers. Often, you can secure a new property off-plan before it is built, meaning an even better price can be secured. The buyer also gets first pick of the plots available.

For peace of mind, they come with a 10-year NHBC warranty covering structural defects, as well as a two-year warranty cover offered by most developers.

Despite reports of an overall housing shortage across the UK, recent reports have revealed that the number of new homes being built is on the rise, with a 25% increase in the first quarter of this year compared with Q1 2021.

This equates to a total of 45,991 new-builds registered to be built across the country. Of these, 35,134 were in the private sector, while only 26,773 were private sector properties in the first quarter of last year.

BuyAssociation has a range of new-build properties available for both property investors and owner occupiers across the UK. Get in touch to find out more.

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