Investing in a new-build comes with a number of benefits to the buyer, but how do developments of new housing affect the wider neighbourhood?
Around 237,000 new-build homes were completed in the year to September to 2023, according to the latest data from Savills’ English Housing Supply Q3 Update. While this figure is below-average compared to previous years, it still means a lot of areas have seen brand-new developments popping up close by, boosting housing provision.
The latest research also shows that planning approvals in London and the east of England declined in the third quarter of this year compared with Q2. However, detailed consents for the north west, south east and south east have risen, indicating an increase in new-build homes is on the horizon.
There are numerous benefits to investing in a new-build, from the heightened energy efficiency and utility bill savings, to the reassurance that comes with the NHBC 10-year warranty. For those who buy off-plan, there is the added advantage of securing a competitive price ahead of construction.
A new report from Better.co.uk has also delved into what the potential effects of new home developments are on the local area, which can be important both for existing homeowners who live there and for anyone considering buying in the near future.
The positive impact of the new-build market
Better.co.uk has come up with a list of five of the most advantageous influences that new-builds can have on a neighbourhood, which can benefit those who live there as well as the local housing market as a whole.
- Infrastructure improvements: As Better.co.uk points out, it is common for developers to contribute to local infrastructure improvements, as this has a positive impact on the popularity of their development. The knock-on effect is that it can improve property prices and demand in the area.
- More local amenities: Some developers – particularly those in big cities – create mixed-use spaces which might include the addition of shops, as well as adding things like parks, schools or recreational areas, all of which benefit new and existing homeowners and tenants. Sometimes, retailers may also decide that the influx of new homes presents a good opportunity to set up a new retail space.
- Economic stimulus: According to Better.co.uk, new-build developments can trigger an increase in jobs in an area by bringing in new businesses to benefit from the added footfall. This can “stimulate local economies”.
- Modernisation: A row or block of smart new properties and streets can boost the aesthetics of an area, which might attract a wider range of buyers and tenants. Again, this can have a positive effect on house prices.
- Increase in demand: The final point made by Better.co.uk is that the additional marketing of an area to sell any new-builds can boost its wider prospects by drawing attention from a greater number of buyers. This can increase overall housing demand, not just for new-builds.
Securing a new-build
Anyone can purchase a newly built property, either prior to its construction (off-plan) or afterwards, from first-time buyers to property investors. While mortgage lending criteria can be stricter, most lenders offer a wide range of products and options to suit the majority of buyers.
There are a number of government schemes available at the moment that may help certain buyer types to secure a new property. For example, the First Homes scheme gives first-time buyers and key workers a discount of 30-50% on a new-build, provided they meet certain criteria.
Shared ownership remains another popular way of buying a share of a brand-new property, with scope to fully own it in the future. Many buyers also take advantage of the Lifetime ISA, which is a special savings account for under-40s that is supplemented by the government, solely for buying a first home.
The Mortgage Guarantee Scheme and the Deposit Unlock scheme both offer the option of purchasing a new-build with a smaller – normally 5% – deposit. Again, buyers should check the criteria and finer details on these schemes, and note that the Mortgage Guarantee Scheme is currently set to end on 31 December 2023.
BuyAssociation is a property investment company that works closely with some of the UK’s top developers, giving investors access to new-build developments and projects ahead of the market. Get in touch today to find out more.
