The housing market received a jump-start last week after a major stamp duty overhaul. With record numbers of people now house-hunting, new-builds have seen a surge in popularity.
Within moments of the news breaking that stamp duty was to be cut for thousands of properties across the UK, property portal Rightmove recorded a 22% surge in visitors to its site. In fact, the day of the announcement – the 7th July – was the firm’s busiest ever day.
With stamp duty now only due on homes over £500,000, prospective buyers are scrambling to get onto or move up the ladder. The tax cut applies to second homes and landlords, too, although the 3% surcharge still applies. According to the portal’s statistics, the aftermath of the property tax cut has been record-breaking.
Last Wednesday 8th July, 8.5 million people visited the website, compared to the previous record of 7.7 million. Estate agents also reported a huge rise in enquiries from prospective buyers. Interestingly, the statistics also showed that enquiries about new-build homes also hit a record high. Rightmove reported a 35% rise in interest from the previous record, and an annual increase of 89%.
Why the interest in new-builds?
Under the new, temporary rates, stamp duty does not apply to properties that are £500,000 or less. As was the case before the change, homes exceeding the lowest bracket are charged at incrementally higher rates, depending on the value. For example, on a property worth £600,000, the first £500,000 is now tax-free, and then the remaining amount from £501,000 to £600,000 is now taxed at 5%.
This means that even buyers of more expensive properties will make big savings. Many may now be in a position to look at pricier homes than they were before. This could explain why there has been a surge in demand for new-builds, as they tend to be more costly to buy than existing homes.
Benefits of buying a new-build
- No chain – When buying an existing property, there is often a chain above you, which can add stress as well as slow things down. This isn’t the case with new-builds.
- Discounts – Developers sometimes offer incentives, enabling larger savings than when buying privately. This is more common when a building project is in its early stages.
- Peace of mind – New-build homes come with an NHBC (or equivalent) 10-year warranty. This includes a two-year builder warranty followed by an eight-year insurance agreement.
- Everything brand new – It goes without saying that when buying a new-build, all the fixtures, fittings and decor are brand new, modern and unused. Most new appliances also come with warranties. Developers often install the latest smart technology as a selling point, too.
- Cheaper and greener – New-builds are substantially cheaper to run than the majority of existing properties. This offsets some of the premium paid at the outset over time. They are built to the latest environmental standards, with better insulation, more efficient heating systems and, as mentioned above, better appliances. According to the Home Builders Federation, more than 80% of new-builds have an A or B energy performance rating. Only 2.2% of older homes have the same.
- Customise – If you invest before or during the building phase (off-plan), you might be able to adapt the decor and even the appliances and layouts yourself.
- Help to Buy – The government’s Help to Buy scheme is only available on new-builds. This has helped thousands of first-time buyers onto the housing ladder.
- Great for tenants – Compared to older, tired rental properties, new-builds are much more appealing to tenants. They won’t have to worry about issues like damp, condensation or unreliable old boilers and heating systems. The fact that bills are much lower is an added bonus for tenants.