Posts with tag: new builds

New research highlights why and where to invest in new-build homes

Published On: June 24, 2020 at 8:03 am

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invest in new-build homes

Have you been considering investing in a new-build property? New research from property developer StripeHomes has been conducted to pinpoint the best areas for such an investment.

The research looked at price premiums, affordability, and house price growth.

New-build price premiums

This research found that the average costs of a new-build in the UK is currently £302,749. This is 33% more than the existing UK house price. Looking at reginal new-build price premiums, it is 60% higher in the North East, 45% in the North West, and 34% in the East of England. London shows the smallest gap at 10%.

Most affordable

It is possible to find new-builds that are more affordable than buying an existing property. StripeHomes says there are as many as 40 UK areas where this is possible. Surrey Heath is top of this list, with the average new-build costing £281,973 (27% cheaper).

The lowest average cost for a new-build can be found in Hyndburn, at £97,939. Close behind are North Ayrshire (£115,305) and Burnley (£122,193). 

Higher house price growth

For those looking to invest and sell on, this research also looks at the appreciation in property values. In the last year, the average UK new-build has increased by 7.3%, compared to just 1.5% for existing homes. 

StripeHomes reports that new-build house price growth has increased by 6-8% across every UK region in the last year. Meanwhile, the market for existing property has only seen a growth of 3% in the best performing regions.

Strong growth has been noted for London, where new-builds are up 7.6%, compared to 1.2% for existing properties. The South East, East of England, South West and North East have also seen some of the strongest new-build house price growth.

Managing director of StripeHomes, James Forrester, commented: “Opting to purchase anything brand new is going to cost you more but when it comes to new-build homes, the premium is often justified and well worth the additional cost. 

“Buying a new-build comes with a whole host of benefits, not just an easier, chain-free sales process with the ability to move straight in. There are a host of incentives available such as paid for stamp duty and help for first time buyers, as well as the fact that new-build homes are often better quality, more energy-efficient, and require little to no maintenance for a good number of years.

“However, the real benefit of a new-build is the appreciation of its value. Despite the tough market conditions seen pretty much since the Brexit vote itself, new-build values have continued to go from strength to strength, far outperforming growth seen in the existing sector.  

“So not only will you purchase a far superior property, but even in areas with the highest new-build premium, it will only take a matter of years before you’re likely to recoup the additional price paid in house price growth.”

All data on new-build and existing house prices sourced from the ONS.

invest in new-build homes
invest in new-build homes

New-Build Development Slows but More Homes are Being Completed

Published On: October 4, 2018 at 9:36 am

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There is presently an increase in new-build developments who were started in the 12 months to June 2018, however, more schemes were completed, the latest Government data reveals.

Official figures for England reveal that annual new-build dwelling starts totalled 160,020 in the year to June 2018, down by 3% in comparison with the year to June 2017.

During the same period, completions totalled 161,240, a 5% annual increase.

Both the private and social housing sector saw a decrease in new starts.

Private sector starts were down 2% annually to 134,660, while housing association building work fell 9% annually to 23,890.

There was a 5% annual increase incompletions from the private sector to 132,370, while housing associations showed a 3% boost to 27,040.

The report said approximately half of the data used to produce the house building statistics are supplied by the National House-Building Council based on its warranty registrations.

The NHBC data showed that 80% of all completions were for new-build houses, the highest proportion since 2003.

NHBC said 13,713 new homes were registered in August 2018, a 1% annual increase.

Of these, 10,588 new homes were registered for the private sector – down 1.3% annually – and 3,125 in the affordable sector, which was up 11.5%.

Steve Wood, Chief Executive of NHBC, commented: “We continue to see strong numbers in many parts of the UK with a substantial uplift in London, driven by increased activity by housing associations and the continued flow of inward investment on for-sale and private rental developments.

“The continuing uncertainties around Brexit and the UK’s economic outlook do not seem sufficient to dent confidence in the new-homes market, where NHBC’s focus remains on helping developers to build more high-quality homes for people across the country.”

Government Announces New Homes Ombudsman for New Build Sector

Published On: October 3, 2018 at 7:59 am

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The Secretary of State for Housing, James Brokenshire, has announced that a New Homes Ombudsman will be launched for the new build housing sector.

The role of the New Homes Ombudsman would be to specifically address issues regarding the build quality of new homes.

Speaking at the Conservative Party Conference, Brokenshire also claimed that the Government’s domestic priority is building enough homes to satisfy the country’s needs.

He said that “decades of under-investment and lack of political will” have created an environment in which homeownership has become unattainable for many people.

Brokenshire insisted that the New Homes Ombudsman would “champion” consumers, despite the wider ombudsman circle emphasising that fairness and impartiality are always at the core of their work.

Brokenshire told delegates: “This new watchdog will champion homebuyers, protect their interests and hold developers to account, and give confidence that, when you get the keys to a new home, you get the quality build you expect and the finish you pay for.”

The announcement lacked any further details, but seems to indicate the Government’s wider direction with the housing market.

It had previously proposed one single ombudsman for the entire housing sector, covering new builds, social housing, and both private sales and lettings.

This now seems unlikely, considering that the Government is launching the New Homes Ombudsman.

An alternative proposal was that consumers would seek redress via a single portal, which would direct them to the appropriate ombudsman. This now seems more likely, with the possibility that there would be only one ombudsman to cover each part of the housing sector.

Katrine Sporle, The Property Ombudsman, has responded to the announcement: “We welcome the news that the Government will launch a New Homes Ombudsman. We have always agreed that new homes should be covered by an ombudsman, as consumers have no idea that, when they buy a new home directly from a developer, they will have no access to a redress scheme.

“This announcement will mean the housing market becomes a fairer place for all involved.”

Where are the best (and worst) locations for new builds in Britain?

Published On: September 12, 2017 at 9:59 am

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Interesting new research from Arygyll Property Partners suggests that a good combination of value for money, house price growth and demand is key to the UK’s best location to build a new property.

Taking this into account, Argyll’s analysis shows that Leeds offers the best mixture. New build homes here are worth 41% than existing properties in the city on average. In addition, new builds have risen in value by 13% year-on-year.

New Build Properties

Data from the report shows that the top 10 local authorities for building new homes were:

Region Major residential planning applications granted New build property price increase (YoY) New build value compare to existing homes Monthly Transactions compared to average for a local authority Weighted Ranking
Leeds 95% 13% 41% 380% 1
Birmingham 96% 14% 40% 373% 2
Cornwall 80% 11% 8% 355% 3
County Durham 85% 12% 59% 244% 4
Wiltshire 84% 14% 29% 215% 5
Bradford 94% 11% 42% 201% 6
City of Bristol 91% 13% 12% 180% 7
Manchester 95% 13% 23% 153% 8
East Riding of Yorkshire 87% 12% 41% 145% 9
Liverpool 97% 11% 55% 139% 10

Brian Markovitz, Director of Argyll Property Partners, observed: ‘Developers should head to Leeds if they’re looking to build homes in England. Property values for new builds in the city are seeing double-digit growth as increasing employment drives demand for homes. The significant gap in the price of new homes compared to existing properties means there are healthy profits to be made, while the high transaction figures suggest homes should be relatively easy to buy and sell.’

‘Leeds City Council is also one of the best for encouraging house building, approving almost all of the major applications it receives. Major new developments such as the Seacroft site in the east of the city suggest many are already discovering the opportunities Leeds has to offer for house builders,’ he continued.[1]

Where are the best (and worst) locations for new builds in Britain?

Where are the best (and worst) locations for new builds in Britain?

Worst New Build Regions

On the other hand, Surrey Heath in South-East England was found to be the least attractive location for new build homes. High property values in Surrey mean that developers have to pay a premium price to ensure a site, in comparison to other regions of the country.

The worst 10 local authorities for building new homes were found to be:

Region Major residential planning applications granted New build property price increase (YoY) New build value compare to existing homes Monthly Transactions compared to average for a local authority Weighted Ranking

(out of 324)
Surrey Heath 75% 7.24 -23% -52% 324
Hambleton 75% 4.44 24% -55% 323
Epsom and Ewell 38% 8.64 12% -50% 322
Ribble Valley 86% 2.69 49% -66% 321
Richmondshire 85% 4.22 35% -64% 320
Pendle 77% 0.96 62% -43% 319
Spelthorne 50% 9.27 -1% -41% 318
Three Rivers 67% 6.89 30% -58% 317
Hammersmith and Fulham 80% 5.23 -2% -17% 316
Islington 79% 6.86 -2% -31% 315

Mr Markovitz concluded by saying: ‘For developers, Surrey Heath doesn’t appear to be the best location for new builds. The higher land values in the area mean that profit margins will be squeezed. Despite Surrey Heath’s proximity to London, the large amount of Green Belt land in the area means home sales are also significantly lower than the average for a local authority. Renovating an existing home may yield better returns for anyone looking to invest in Surrey Heath. It’s also noticeable that two London boroughs feature close to the bottom as Stamp Duty, high land values and a decline in transactions combine to hamper Prime Central London’s attractiveness to developers.’[1]

[1] http://www.propertyreporter.co.uk/property/where-are-the-best-and-worst-locations-in-the-uk-to-build-new-homes.html

Industry reacts to Government plans to ban leaseholds on new builds

Published On: July 26, 2017 at 11:11 am

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Yesterday saw the Government outline plans to ban housebuilders from selling new build properties as leasehold in England, following outrage over contracts permitting property owners to pay fees for ordinary works.

Unsurprisingly, the move has been welcomed by a number of property investors and industry peers.

Leasehold Bans

Martin Bikhit, Managing Director of Kay & Co, observed: ‘We welcome the ban for leasehold fees on new build houses. High ground rents substantially increase the cost of a lease extension or the purchase of the freehold of a property, so this proposal will make things much fairer for buyers in the long run.’[1]

Despite the proposals being met with optimism by many, there is still confusion on the future of many existing leasehold homeowners.

It is expected that the Department for Communities and Local Government (DCLG) will consult on what measures it can take in order to support leaseholder facing onerous charges. These include spiralling ground rents.

A DCLG spokesperson said: ‘Under Government plans, ground rents could be reduced so that they relate to real costs incurred and are fair and transparent to the consumer.’[1]

Positive Step

Mark Farmer, Government advisor on construction CEO of property and construction consultancy Cast, said: ‘The government’s plan to ban leaseholds on new build houses in England is a step in the right direction for fixing our broken housing market.’

Industry reacts to Government plans to ban leaseholds

Industry reacts to Government plans to ban leaseholds on new builds

‘Leasehold agreements for houses and the subsequent ground rents that are charged, artificially distort a housing market that is already struggling with issues surrounding affordability. Banning developers from selling new-build houses on leasehold agreements to drive additional revenue may help recover some of the confidence that the public has lost in the sector.’

Mr Farmer went on to note: ‘Without action on this and the parallel housing quality debate there is a real risk of buyers starting to move away from new build stock which would be a disaster for housing supply.’[1]

Certainty

Camilla Dell, Managing Partner at Black Brick, feels that the planned ban will give both protection and more certainty to buyers of new builds in the future.

Dell stated: ‘When purchasing any property, new build or not, with a long lease, the ground rent should always be peppercorn, but it does come down to the conveyancing process and for the buyers solicitor to carefully check the sales contract and ensure buyers interests are protected.’ [1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/7/plan-to-ban-leaseholds-on-new-build-houses-is-step-in-right-direction

 

Can the UK Build 180,000 Homes a Year?

Published On: April 28, 2015 at 9:30 am

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Recent research by Knight Frank has revealed that building over 180,000 new houses a year is unachievable in the current market.

More than two thirds of house builders in the UK believe this is impossible. 67% of respondents said the maximum sustainable annual delivery of new builds is 180,000 or less. Only 9% think it is possible to build over 200,000 residential properties per year.1

Over half of all developers and builders think an increase in new builds over the next year is unlikely. However, about 60% predict a continuous rise in the amount of house building starts and completions in the next 12 months.1 

Can the UK Build 180,000 Homes a Year?

Can the UK Build 180,000 Homes a Year?

The report also revealed that almost four in five respondents (78%) expect new build house prices to increase in the next year, with 43% predicting rises of up to 5%. 91% also think there will be an increase in construction costs due to the pressure on builders. Most of these respondents (59%) expect a rise of 5-10% this year.1

Furthermore, two-thirds (68%) believe Greenfield land prices will increase.1

Over half of respondents (56%) said that the Community Infrastructure Levy (CIL) is suppressing development volumes.1

The study also asked house builders what measures policymakers could make to increase long-term house building in the UK. The most important step was increasing resources in local planning departments (82%), followed by improvements to skills and training in the construction industry (58%), and opening up public land (57%) completing the top three.1 

Head of Residential Research at Knight Frank, Grainne Gilmore, says: “In the run-up to the election, all political parties agree that the delivery of more new homes is a priority. Yet more than two-thirds of house builders believe that under current market conditions, the maximum number of units that can be sustainably delivered each and every year is 180,000 or less.

“Policymakers, especially those in power after the election, may want to heed the calls from house builders to beef up planning departments in local authorities, plough more investment into skills and training in the construction sector and provide better access to public sector land, moves which the house building industry is signalling could move the country closer to building enough homes for all.”1 

Joint Head of Residential Development at Knight Frank, Justin Gaze, adds: “The capacity to deliver the sheer number of new homes required is the fundamental issue faced by the UK’s house builders.

“The inability to create the necessary number of new homes is being driven primarily by a skills shortage in the development sector which shrunk dramatically following the financial crisis, limited development funding and the lengthy mortgage approval process, which is delaying purchasers.”1 

1 http://www.propertyreporter.co.uk/property/is-180000-new-homes-a-year-achievable.html