April 22, 2025 • 20 mins
In this episode of the Merryn Talks Money UK housing mini-series, hosts Merryn Somerset Webb and Money Distilled author John Stepek are joined by Paula Higgins, founder and chief executive of HomeOwners Alliance, to tackle the question: are new-build properties a wise choice?
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:12):
Welcome to Merin Talks Your Money, the personal finance edition
of Merin Talks Money. In these bonus podcasts, we talk
about the best strategies for making the most of your money.
I'm Merindumseet Web Bloomberg UK Wealth Editor at Large and
with me as ever senior reporter and author of the
Money Distilled newsletter. John Stabeck, Hi.
Speaker 3 (00:27):
John hil We are really rattling.
Speaker 2 (00:30):
Through this, aren't we. I mean, here we are in
episode five already there's almost nothing more to know except
for what you're going to find out today. Now before
we start listen to.
Speaker 4 (00:38):
This, hundreds of new homes up and down the country
have been built using weak mortar that does not meet
recommended industry standards, and by new we mean newly built.
Juliet Says brought a new home listed as being on
one of the most expensive estates in England. The company
had refused to repair ninety one snagging problems. The gate collapsed,
(00:59):
for example, and a coat bottle was found inside a pillar.
Tweet from Paul I purchased a new home last December.
I've had multiple problems, mainly drainage. My garden is constantly flooded.
Speaker 2 (01:09):
Hearing all those stories slightly reminds me of the conversation
we had with Professor Yolanda Barnes in our first episode,
remember that about new builds, and particularly about flats and
how they're an unknown quantity. You don't quite know what
you're getting. You don't know where the chargers are going
to go, all that kind of thing. So maybe you're
better off trying to buy a house or flat that
you know has already stood the test of some time.
(01:31):
At least you know what you're getting when you buy
an old house, or maybe you don't know what you're getting.
Speaker 3 (01:35):
I don't know.
Speaker 2 (01:35):
We need an expert for this, so to help us
answer this question, we are today joined by Paula Higgins,
who is CEO of the Homeowner's Alliance HOA HOA six
A champion the interest of Britain's homeowners. That's an awful
lot of us and provide unbiased practical advice. Before this,
she spent many years working as a civil silver we
might like to hear a bit about that too, and
led the previous government's review into building control. Paula, thank
(01:57):
you so much for joining us.
Speaker 1 (02:00):
Lovely to be here.
Speaker 2 (02:01):
Okay, right, we've got quite a lot to get through here.
So first, can I just ask you a question You
may not know the answer to this orthod off your head,
but roughly what percentage of houses that change hands every
year were sold every year a new build and what
are secondhand?
Speaker 1 (02:15):
There's about a million transactions a year, and I'm not sure.
I mean, we're sort of running about, you know, we're
not meeting the targets for building new build, but there's
generally about forty thousand, if we're talking about flats in particular,
forty thousand new build flats going on the market every year.
But it's the new build is a very small percentage
of the overall housing market.
Speaker 2 (02:35):
Yeah, I mean I targeted three fifty year or the
current target is three fifty a year, right.
Speaker 1 (02:40):
That's going to be pretty impossible to make, so hats
after them.
Speaker 2 (02:44):
Yeah, and I understand that this year we're already running
behind last year, so we're not going to make that,
but none of less. So, so there are a lot
of people out there buying new builds every year. And
the statistic that always s turns out to me when
I look at this This is a study from a
couple of years back suggested that you're buying you build,
you walked through the door, and it's instantly worth around
fifteen sixteen percent less than it was before you walk
(03:07):
through the door. So if we're looking at old versus new,
I would have thought the first thing to look at
is if you're only staying there for a short time.
If you're looking at buying a house to stay and
only for a couple of years, you've got a big
hill to climb or other. The market has a big
hill to climb to get you even evens with that depreciation,
(03:28):
plus the costs of purchase your stamp duty, and you
know your various fees for surveyors, et cetera, which you've
talked about before, So that seems to me to be
the immediate thing.
Speaker 1 (03:38):
It is. It's a big hurdle. So we always say,
if you are buying you build, you might want to
think about staying there for five years. But that said,
you can also offset that new build premium by asking
for lots of extras. So you will have developers who
will pay for your stamp duty, who will you know,
upgrade you know, sort of flooring, sort of fittings, that
sort of thing. So they like to keep the price
(04:00):
of the new build high. But actually, if you can
get all these extra bits and pieces in there, you
might be okay. And the other thing we'd say is
that actually, if you want this sort of new build
lifestyle living is that look at resale. So you know,
if you're finding the property is a couple of years old,
then you might be in for a bargain. Really, so
you're not paying that new build premium, so.
Speaker 2 (04:17):
My second hand new build.
Speaker 1 (04:20):
Exactly because the warranties will still be there, so you know,
you'll still have the ten year warranty. So it can
be you know, a good way to if you want
that sort of no hassle free lifestyle you want to
move in, you don't have the time to do things up,
you don't have the inclination to do that, it might
be a good, good move.
Speaker 2 (04:40):
So it just took me through. You mean when you
say new build lifestyle, well new bill.
Speaker 1 (04:44):
So you know, we know that younger homeowners generally like
the idea of a new build. Maybe that's because they're
a bit inexperienced, but actually there's a really real benefits
of people liking to buy new bills, so the energy
efficiency will better lower costs. The fact that you can
move in, you can put a stamp on your own,
you can sort of develop it how you want, so
that there is some benefits of that. When you're buying
(05:06):
something old, you know, you don't know what the costs
are going to be. You know you might need to
replace the roof, but so you've really got to look at,
you know, the sort of the whole picture of it.
But I would say with new build and what people
really need to be aware of, it's not just the
structure of the property, whether it's a flat or a house,
it's that you've got to look at the charges really
carefully because they're estimating these charges, and we know they're
(05:28):
unestimating them. So if you're buying a leasehold property and
they're saying service charges will be x a year, that
can increase massively. And particularly if you're buying on a
new build a state, there's something called estate charges. A
lot of these states aren't being adopted by the local authorities,
so if you're living in an existing area, you're not
paying for that playground. But if you're living in a
new build a state, you might be, and these charges
(05:50):
are uncapped and you can't control them.
Speaker 2 (05:53):
Okay, Hell, let me take you back a bit there.
When you say not adopted by the local council, you
mean to these biggest states that you see going up
around the place. They have roads in them, they have
some park maybe as you say, a playground, they need
the rubbish collected, all that kind of thing. If they're
not adopted by the local council, I then not pulled
into the public services system, all that upkeep and those
(06:14):
services have to be paid for external to the council
or not.
Speaker 1 (06:19):
Not that you still be paying the council tax, so
you still get your bins collected and that sort of thing,
and you might get you know, sort of basic services.
But if you've got like a playground on that new
bill distinct, you're probably paying for that in some cases
the lighting on that. And then we're really worried because
we're seeing that actually maybe the quality is not that good.
So it might be fine for the first few years,
but when you go to sell that next buyer the conveyance,
(06:42):
you will be saying, well, what are these charges for?
And we also know that even if you're not happy
with the management it. You can't change your manager. So
at least if you're buying a lease whole property and
you're not happy with the managing agent, you can. You've
got the right to manage and to share a freehold.
But if you're on these are called estate charges. We've
got lots of advice in our site.
Speaker 2 (07:00):
But who manages the estate? So when you say in
a book of flats you have a managing agent and
you have some degree of power, particularly if you own
a share of freehold or a common hold, you have
some degree of power to go after them. But let's
say you buy a house on an estate that was
built by Barrett Homes or Percimon whatever. Do they continue
to manage that estate or does that become disas.
Speaker 1 (07:22):
Do they sell it? They sell it to somebody else
who will manage that estate, and you have, you know,
you've got very weak controls over it. That said, the
government is looking to do something about this, and they
are consulting on this later in the year. But you
know what will happen with the existing estates now and
we are campaigning for adoption of all new build estates
(07:43):
going forward.
Speaker 2 (07:44):
John is looking absolutely horrified. We've never heard of estate
management charges.
Speaker 3 (07:49):
No, I just want to interupt, as the talking idiot
on the podcast here, it's so you're telling me that
you can go in buy a new home and what
you're basically saying up for is an uncapped liability in
timsy and your service course. That's just accitable. Why why
(08:09):
would you ever do that? Why would you say, yes,
I am definitely going to pay this and your fee.
Speaker 2 (08:14):
Okase you don't understand compounding and you don't understand the
nature of the present value of an uncapped liability.
Speaker 1 (08:23):
And I would say, also, you're being sold the dream.
So you're buying a new build, and if you if
you're going with the solicitors or the conveyancers that are
recommended by the new build developers, you might not be
told this. And what they can say is they'll they'll
just say, oh, there's a little bit of money, you know,
maybe a couple hundred pounds of years for upkeep of
the you know, the common grass or whatever. But this
(08:44):
can increase and you don't have you can't say, it's
very hard to get to change that managing agent. And
with leaseholed properties you can go to the first property tribunal.
There's no such mechanism with these estate charges, which is
why I think it is like the big scandal. It's
called fleecehold. So look it up, shuere But I just
(09:04):
I guess.
Speaker 3 (09:05):
I mean I was a weird the world issues. I
just hadn't a pre season bad. I mean, this is
like we're getting on neckers on the twist over like
PPI for Carls at the moment. This is so much
was this is life ruining. Oh sorry, but anyway.
Speaker 2 (09:20):
Well John as well, if you if you're going to
go and look at some of the big flats in London,
those big new leasehold states where you see, you know,
a couple of big blocks of luxury flats going up
in central London, and then they had that land around
them which is not adopted by the council and has
to be kept up to a relatively high standard. And
you know, your general public of walking through it and
stopping here and stopping there, and you're effectively paying for
(09:41):
a public park in central London. I mean it's extraordinary, right, Sorry, Paula,
I'm taking over back to you.
Speaker 4 (09:47):
Yeah.
Speaker 1 (09:47):
No, and I can say that happened in I think
it was Devin, a Dorset where they actually were paying
for a big country park next door. So and the
council tried to help. They tried to step in and say, look,
we will take over the management of it, but we'll
charge you for it. And then they were stopped because
they couldn't treat some of their you know, their constituents
or their you know, the people are living there differently
(10:09):
from others. But the people there were delighted because then
the charges were a bit more reasonable. So it is
a real problem, and it's something that I think it
will become, you know, bigger and bigger in the future,
especially as these new build estates. As people are starting
to sell, they might find that they find a fewer
buyers to be able to buy that.
Speaker 3 (10:27):
I'm just so amazing.
Speaker 1 (10:29):
Yeah. The other thing I would say is to be
aware of it is that if you're buying a leasehold
property today, and you build a leasehold property today, the
government is also committed to bringing common hold so that
will be sort of in a few years time, you'll
only be able to buy new common hold properties, which
is a generally good thing. There's more control, you won't
have service charges, you have budgets. But if you're buying
(10:49):
a lease hold property today a flat in a few
years timing, you might be competing with those common hold properties,
so you might need to think about switching to a
common hold or you might need to price in that differential.
So that's another thing to think about if you are
looking to buy a new build flat today.
Speaker 2 (11:06):
Okay, interesting, Now I'm trying to think of upsides to
buying your I've.
Speaker 1 (11:09):
Got an upside so far.
Speaker 2 (11:11):
We've got as far as maybe they'll chuck in the carpets,
which isn't really doing it for me. But the biggest
one I can think of is well, you could say,
well maybe you can get help to buy, or you
can get shared owner shit, but we've been through those.
Don't touch them with a bodge pole listener. So here's
the only other thing I can think of. No chain,
No chain, You buy direct from whoever's going to rip
(11:32):
you off at the house builders, and you get to
move in right away and it's not going to collapse.
Speaker 1 (11:37):
Yeah that's true. But if you are buying with a mortgage,
you might you want to make sure that that delivers
on time. But I can give you another upside of
buying new build. So if it's the energy Performance Certificate
of A or B. You can get a green mortgage.
You can get lower mortgage rates. So the best mortgage
actually at the moment now is Barkleys, which is under
four percent, and you can get cash backs. So there's
(12:00):
another upside that you might get a mortgage better mortgage
rate if you're buying a new build. But it is
true that if you're you know, there's no chains involved,
which is brilliant, but you know, it's very difficult for
somebody who's trying to buy and you build, who's relying
on a mortgage, which is most of us of course,
if it's more than six months in advance, because that
mortgage offer will run out and you could be stuck
(12:23):
between a really difficult position if you can't renew that
offer or get another mortgage offer.
Speaker 2 (12:29):
Paula, I think that was an excellent effort with the
cheaper mortgage, and I'm I get it well done, my belt,
Why would you not just buy one that was a
couple of years older, save the save the fifteen sixteen
percent and you build premium and take an ordinary mortgage.
I mean, if we're after the cheapest option here stuff
the green mortgage, mortgage get the lower price.
Speaker 1 (12:49):
Yes, no, I would agree. And the good thing is
if you're buying something a few years older, you know
you'll you'll see you know what you're getting. Because a
lot of people, if they're buying and you build, they
get they get sort of sucked into the dream. And
and we've seen you build estates have been promised schools
or GP surgeries or a high street and they don't materialize.
And that is really difficult to sow because you're here
(13:10):
just based on marketing brochures. What we always say if
you're buying something you build, is make sure you get
absolutely everything in writing, so you've got some way of
coming back. If you've been promised car parking spots, it's
a cul de sac, whatever it is, make sure you
get everything in writing.
Speaker 2 (13:27):
It seems to me that one of the things that
we're really talking about here is the sense of community.
So if you buy an old house, and particularly if
you buy one in a in a town or village outskirts,
so if you can already see what the community is
going to be like, so you can know if you've
got a pub, you've got a shop, what kind of
other people live in the area, etc. You get some
sense of how you're going to live when you buy
(13:48):
an older house, whereas when you buy a new house,
as you say, you're buying a brochure, not a reality
or not a community.
Speaker 1 (13:54):
That's true, and it's it's very hard to price that
in so you don't know what it's going to be like.
You've got no comparables. So if you're buying an older property,
you can look on land registry and see what other
people are paying for it. You could see if you
could do it up, put an extension in a loft conversion,
you can add value to it. But if you're buying
into a completely new development, there's no comparables to see
(14:15):
is that going to increase? And that's where you really
need to do your research properly. Not all developers are
the same, you know, you want to see that the
developers that maybe hold their resale value. There's a lot
to think about.
Speaker 3 (14:28):
Actually, was something I wanted to ask about, is you
know this ten years guarantee that you get with a
new built home, Because in my experience, everything to do
with property is the most caveat emptor thing you will
ever buy in your life, and there is no comeback.
Or in anything at all, So I'm just want to done.
That is the guarantee actually both very much.
Speaker 1 (14:49):
Yeah, it's it's really limited. So the first two years,
you know, the developers should have, you know, do the
snags and things like that. And that's why we always
say make sure you get a snagging survey. Diorize that
two your points, because if you don't get anything fixed
before then you might be a bit stuffed because between
years two and ten it's structural. So it's really structural stuff,
(15:13):
and there's also ways of invalidating, so if you decide to.
We have a situation somebody came to our site they
changed the radiators. You know, a young couple bought a
new bill. They just wanted to sort of have nicer radiators.
They invalidated that warranty when they found out the boiler
and there's problems with that. So it is really tricky.
So I would say again, you know, make sure you
(15:35):
know you now can get pre completion inspections. And it
seems a bit odd that you're buying something you don't
expect to get a mechanic to buy a new car
to look over it, but in this case we probably
did it's not all the same, so it is a
bit bonkers.
Speaker 2 (15:51):
God, there's so many reasons to loathe house builders. It's insane.
Isn't The other thing that I worry about with new
bills it's the size of the rooms. And when you
look at houses built even up until the fifties, sixties,
and particularly even council housing for example, built in the
nineteen thirties, the rooms are big and spaceous in light,
(16:12):
et cetera. But when you look at the floor plans
of new built you often see really very small floor space,
small small rooms, and that seems to me to be
something of a concern.
Speaker 1 (16:24):
Yeah. No, and they even do things like put in
tiny furniture, or they might not have wardrobes in there.
You don't have built in wardrobes. And one of the
reasons why, because they're building for profits. So and we
we market our rooms our houses on based on number
of rooms in most other countries of European countries is
square footage. So then you could be able to compare
(16:44):
you know, a two bed Victorian flat to which might
be the same space as a you know, a small
three bed house, So I think it is. And that's
where you know, you want more information and we're really
much wanting as much information on If you're looking at
right Movements Zoo in the property portals, they are actually
we did some research earlier this year they're actually doing
more on that. So you can look at the floor plans,
(17:06):
you can look at the square footage and do the
sums yourself. What's the price per square footage you're paying for?
This slightly takes us.
Speaker 2 (17:14):
Back to use a buying agent who knows all this stuff,
not back to we haven't we haven't done that episode.
Speaker 1 (17:19):
Yeah, because in other countries you buying agents and estate agents,
you know they're working on behalf of the seller. The
buyers aren't aware of that. But you know, with the
affordability so stretched, buying agents seem to be for the
rich and the time pouring cash rich. But yeah, no,
and that's why with our site, that's what we try
(17:39):
to do. We try to empower people, get them to
ask the right questions, you know, making the right choices
and avoid the pitfalls of others.
Speaker 3 (17:47):
Don't know if Paula, if you would want to discuss this,
but obviously you have been within nothing distances the levels
of power in the government and I don't know if
there's anything from that experience that you would want to see,
like how we've ended up here if.
Speaker 1 (18:02):
You like, yeah, I mean it's it's interesting because that's
why I set up Homeowners' Alliance actually, because I was
working in government and housing and I was being approached
by you know, some big developers saying, oh, we don't
need to do inspections. You know, consumers don't want to,
you know, they want to save money. And I couldn't
get a voice of the homeowner. I couldn't go out
(18:22):
and ask people say, do you really want, like you know,
something to come and inspect the work that you're builder's
doing or whatever. So, and that's why I felt there
wasn't a voice for the homener and those aspire to own.
So we're not just a homeowning club. We're very keen
on you know, helping as many people get onto the
property ladder. And that's why I set up as to
be this voice. When we first started the first sources
(18:43):
of complaints to our site, it was on new build
estate agents and leasehold and it still is the case
that they come to us because they've got nowhere else
to go. So that's why we're here, that's why we exist.
Speaker 2 (18:57):
Okay, thank you. Well, I think we've some that up
pretty well. I'm going to try and sum up the
positives of buying a new build.
Speaker 1 (19:05):
Okay, here we go.
Speaker 2 (19:07):
Energy efficiency, modern design, be that a good thing or
a bad thing, a warranty that may or may not last,
common spaces that may or may not long term destroy.
Speaker 1 (19:20):
The value of your house.
Speaker 2 (19:22):
And finally, no change, no change, and possibly free carpets.
So that's new built plus points of older houses. You
know what you're getting. You might get some character, bigger
floor plans, you might get a bigger garden, and it
might even have some plants in it. That seems like
a good thing, and you won't lose quite so much
money quite so fast, depending on where the market goes.
(19:44):
Is that fair? Is that going to cover it?
Speaker 1 (19:46):
That covers it? I guess. The only thing with older
builds is that you know, you might have lots of
maintenance costs. I live in an older property and I'm
always shocked at how much things cost when I'm having
to do things up. Yeah, but you can also add
value with older bills. You can you can increase the
value easily.
Speaker 2 (20:02):
Okay, So I will just say one last thing, which
is that we do live in an older house and
when we moved in, here's back to your cost of maintenance.
The bathroom ceiling fell down in the kitchen, so you
know it's not all upside. Paula, thanks so much for
joining us and bringing our expertise to the show.
Speaker 3 (20:19):
We really appreciate it.
Speaker 1 (20:21):
That's been good fun. Thank you.
Speaker 2 (20:25):
Thanks for listening this week's Merren Talk to Your Money.
If you like us show, rate, review, and subscribe wherever
you listen to podcasts. Also be sure to follow me
in John on ex or Twitter at Marinus w and
John Underscore Stepic. This episode was produced by Summerside and
Moses Andam sound designed by Blake Maple's Special thanks, of
course to Paula Higgins. Questions and comments on this show
and all our shows are always welcome. Our show email
(20:46):
is Meren Money at Bloomberg dot net.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:12):
Welcome to Merin Talks Your Money, the personal finance edition
of Merin Talks Money. In these bonus podcasts, we talk
about the best strategies for making the most of your money.
I'm Merindumseet Web Bloomberg UK Wealth Editor at Large and
with me as ever senior reporter and author of the
Money Distilled newsletter. John Stabeck, Hi.
Speaker 3 (00:27):
John hil We are really rattling.
Speaker 2 (00:30):
Through this, aren't we. I mean, here we are in
episode five already there's almost nothing more to know except
for what you're going to find out today. Now before
we start listen to.
Speaker 4 (00:38):
This, hundreds of new homes up and down the country
have been built using weak mortar that does not meet
recommended industry standards, and by new we mean newly built.
Juliet Says brought a new home listed as being on
one of the most expensive estates in England. The company
had refused to repair ninety one snagging problems. The gate collapsed,
(00:59):
for example, and a coat bottle was found inside a pillar.
Tweet from Paul I purchased a new home last December.
I've had multiple problems, mainly drainage. My garden is constantly flooded.
Speaker 2 (01:09):
Hearing all those stories slightly reminds me of the conversation
we had with Professor Yolanda Barnes in our first episode,
remember that about new builds, and particularly about flats and
how they're an unknown quantity. You don't quite know what
you're getting. You don't know where the chargers are going
to go, all that kind of thing. So maybe you're
better off trying to buy a house or flat that
you know has already stood the test of some time.
(01:31):
At least you know what you're getting when you buy
an old house, or maybe you don't know what you're getting.
Speaker 3 (01:35):
I don't know.
Speaker 2 (01:35):
We need an expert for this, so to help us
answer this question, we are today joined by Paula Higgins,
who is CEO of the Homeowner's Alliance HOA HOA six
A champion the interest of Britain's homeowners. That's an awful
lot of us and provide unbiased practical advice. Before this,
she spent many years working as a civil silver we
might like to hear a bit about that too, and
led the previous government's review into building control. Paula, thank
(01:57):
you so much for joining us.
Speaker 1 (02:00):
Lovely to be here.
Speaker 2 (02:01):
Okay, right, we've got quite a lot to get through here.
So first, can I just ask you a question You
may not know the answer to this orthod off your head,
but roughly what percentage of houses that change hands every
year were sold every year a new build and what
are secondhand?
Speaker 1 (02:15):
There's about a million transactions a year, and I'm not sure.
I mean, we're sort of running about, you know, we're
not meeting the targets for building new build, but there's
generally about forty thousand, if we're talking about flats in particular,
forty thousand new build flats going on the market every year.
But it's the new build is a very small percentage
of the overall housing market.
Speaker 2 (02:35):
Yeah, I mean I targeted three fifty year or the
current target is three fifty a year, right.
Speaker 1 (02:40):
That's going to be pretty impossible to make, so hats
after them.
Speaker 2 (02:44):
Yeah, and I understand that this year we're already running
behind last year, so we're not going to make that,
but none of less. So, so there are a lot
of people out there buying new builds every year. And
the statistic that always s turns out to me when
I look at this This is a study from a
couple of years back suggested that you're buying you build,
you walked through the door, and it's instantly worth around
fifteen sixteen percent less than it was before you walk
(03:07):
through the door. So if we're looking at old versus new,
I would have thought the first thing to look at
is if you're only staying there for a short time.
If you're looking at buying a house to stay and
only for a couple of years, you've got a big
hill to climb or other. The market has a big
hill to climb to get you even evens with that depreciation,
(03:28):
plus the costs of purchase your stamp duty, and you
know your various fees for surveyors, et cetera, which you've
talked about before, So that seems to me to be
the immediate thing.
Speaker 1 (03:38):
It is. It's a big hurdle. So we always say,
if you are buying you build, you might want to
think about staying there for five years. But that said,
you can also offset that new build premium by asking
for lots of extras. So you will have developers who
will pay for your stamp duty, who will you know,
upgrade you know, sort of flooring, sort of fittings, that
sort of thing. So they like to keep the price
(04:00):
of the new build high. But actually, if you can
get all these extra bits and pieces in there, you
might be okay. And the other thing we'd say is
that actually, if you want this sort of new build
lifestyle living is that look at resale. So you know,
if you're finding the property is a couple of years old,
then you might be in for a bargain. Really, so
you're not paying that new build premium, so.
Speaker 2 (04:17):
My second hand new build.
Speaker 1 (04:20):
Exactly because the warranties will still be there, so you know,
you'll still have the ten year warranty. So it can
be you know, a good way to if you want
that sort of no hassle free lifestyle you want to
move in, you don't have the time to do things up,
you don't have the inclination to do that, it might
be a good, good move.
Speaker 2 (04:40):
So it just took me through. You mean when you
say new build lifestyle, well new bill.
Speaker 1 (04:44):
So you know, we know that younger homeowners generally like
the idea of a new build. Maybe that's because they're
a bit inexperienced, but actually there's a really real benefits
of people liking to buy new bills, so the energy
efficiency will better lower costs. The fact that you can
move in, you can put a stamp on your own,
you can sort of develop it how you want, so
that there is some benefits of that. When you're buying
(05:06):
something old, you know, you don't know what the costs
are going to be. You know you might need to
replace the roof, but so you've really got to look at,
you know, the sort of the whole picture of it.
But I would say with new build and what people
really need to be aware of, it's not just the
structure of the property, whether it's a flat or a house,
it's that you've got to look at the charges really
carefully because they're estimating these charges, and we know they're
(05:28):
unestimating them. So if you're buying a leasehold property and
they're saying service charges will be x a year, that
can increase massively. And particularly if you're buying on a
new build a state, there's something called estate charges. A
lot of these states aren't being adopted by the local authorities,
so if you're living in an existing area, you're not
paying for that playground. But if you're living in a
new build a state, you might be, and these charges
(05:50):
are uncapped and you can't control them.
Speaker 2 (05:53):
Okay, Hell, let me take you back a bit there.
When you say not adopted by the local council, you
mean to these biggest states that you see going up
around the place. They have roads in them, they have
some park maybe as you say, a playground, they need
the rubbish collected, all that kind of thing. If they're
not adopted by the local council, I then not pulled
into the public services system, all that upkeep and those
(06:14):
services have to be paid for external to the council
or not.
Speaker 1 (06:19):
Not that you still be paying the council tax, so
you still get your bins collected and that sort of thing,
and you might get you know, sort of basic services.
But if you've got like a playground on that new
bill distinct, you're probably paying for that in some cases
the lighting on that. And then we're really worried because
we're seeing that actually maybe the quality is not that good.
So it might be fine for the first few years,
but when you go to sell that next buyer the conveyance,
(06:42):
you will be saying, well, what are these charges for?
And we also know that even if you're not happy
with the management it. You can't change your manager. So
at least if you're buying a lease whole property and
you're not happy with the managing agent, you can. You've
got the right to manage and to share a freehold.
But if you're on these are called estate charges. We've
got lots of advice in our site.
Speaker 2 (07:00):
But who manages the estate? So when you say in
a book of flats you have a managing agent and
you have some degree of power, particularly if you own
a share of freehold or a common hold, you have
some degree of power to go after them. But let's
say you buy a house on an estate that was
built by Barrett Homes or Percimon whatever. Do they continue
to manage that estate or does that become disas.
Speaker 1 (07:22):
Do they sell it? They sell it to somebody else
who will manage that estate, and you have, you know,
you've got very weak controls over it. That said, the
government is looking to do something about this, and they
are consulting on this later in the year. But you
know what will happen with the existing estates now and
we are campaigning for adoption of all new build estates
(07:43):
going forward.
Speaker 2 (07:44):
John is looking absolutely horrified. We've never heard of estate
management charges.
Speaker 3 (07:49):
No, I just want to interupt, as the talking idiot
on the podcast here, it's so you're telling me that
you can go in buy a new home and what
you're basically saying up for is an uncapped liability in
timsy and your service course. That's just accitable. Why why
(08:09):
would you ever do that? Why would you say, yes,
I am definitely going to pay this and your fee.
Speaker 2 (08:14):
Okase you don't understand compounding and you don't understand the
nature of the present value of an uncapped liability.
Speaker 1 (08:23):
And I would say, also, you're being sold the dream.
So you're buying a new build, and if you if
you're going with the solicitors or the conveyancers that are
recommended by the new build developers, you might not be
told this. And what they can say is they'll they'll
just say, oh, there's a little bit of money, you know,
maybe a couple hundred pounds of years for upkeep of
the you know, the common grass or whatever. But this
(08:44):
can increase and you don't have you can't say, it's
very hard to get to change that managing agent. And
with leaseholed properties you can go to the first property tribunal.
There's no such mechanism with these estate charges, which is
why I think it is like the big scandal. It's
called fleecehold. So look it up, shuere But I just
(09:04):
I guess.
Speaker 3 (09:05):
I mean I was a weird the world issues. I
just hadn't a pre season bad. I mean, this is
like we're getting on neckers on the twist over like
PPI for Carls at the moment. This is so much
was this is life ruining. Oh sorry, but anyway.
Speaker 2 (09:20):
Well John as well, if you if you're going to
go and look at some of the big flats in London,
those big new leasehold states where you see, you know,
a couple of big blocks of luxury flats going up
in central London, and then they had that land around
them which is not adopted by the council and has
to be kept up to a relatively high standard. And
you know, your general public of walking through it and
stopping here and stopping there, and you're effectively paying for
(09:41):
a public park in central London. I mean it's extraordinary, right, Sorry, Paula,
I'm taking over back to you.
Speaker 4 (09:47):
Yeah.
Speaker 1 (09:47):
No, and I can say that happened in I think
it was Devin, a Dorset where they actually were paying
for a big country park next door. So and the
council tried to help. They tried to step in and say, look,
we will take over the management of it, but we'll
charge you for it. And then they were stopped because
they couldn't treat some of their you know, their constituents
or their you know, the people are living there differently
(10:09):
from others. But the people there were delighted because then
the charges were a bit more reasonable. So it is
a real problem, and it's something that I think it
will become, you know, bigger and bigger in the future,
especially as these new build estates. As people are starting
to sell, they might find that they find a fewer
buyers to be able to buy that.
Speaker 3 (10:27):
I'm just so amazing.
Speaker 1 (10:29):
Yeah. The other thing I would say is to be
aware of it is that if you're buying a leasehold
property today, and you build a leasehold property today, the
government is also committed to bringing common hold so that
will be sort of in a few years time, you'll
only be able to buy new common hold properties, which
is a generally good thing. There's more control, you won't
have service charges, you have budgets. But if you're buying
(10:49):
a lease hold property today a flat in a few
years timing, you might be competing with those common hold properties,
so you might need to think about switching to a
common hold or you might need to price in that differential.
So that's another thing to think about if you are
looking to buy a new build flat today.
Speaker 2 (11:06):
Okay, interesting, Now I'm trying to think of upsides to
buying your I've.
Speaker 1 (11:09):
Got an upside so far.
Speaker 2 (11:11):
We've got as far as maybe they'll chuck in the carpets,
which isn't really doing it for me. But the biggest
one I can think of is well, you could say,
well maybe you can get help to buy, or you
can get shared owner shit, but we've been through those.
Don't touch them with a bodge pole listener. So here's
the only other thing I can think of. No chain,
No chain, You buy direct from whoever's going to rip
(11:32):
you off at the house builders, and you get to
move in right away and it's not going to collapse.
Speaker 1 (11:37):
Yeah that's true. But if you are buying with a mortgage,
you might you want to make sure that that delivers
on time. But I can give you another upside of
buying new build. So if it's the energy Performance Certificate
of A or B. You can get a green mortgage.
You can get lower mortgage rates. So the best mortgage
actually at the moment now is Barkleys, which is under
four percent, and you can get cash backs. So there's
(12:00):
another upside that you might get a mortgage better mortgage
rate if you're buying a new build. But it is
true that if you're you know, there's no chains involved,
which is brilliant, but you know, it's very difficult for
somebody who's trying to buy and you build, who's relying
on a mortgage, which is most of us of course,
if it's more than six months in advance, because that
mortgage offer will run out and you could be stuck
(12:23):
between a really difficult position if you can't renew that
offer or get another mortgage offer.
Speaker 2 (12:29):
Paula, I think that was an excellent effort with the
cheaper mortgage, and I'm I get it well done, my belt,
Why would you not just buy one that was a
couple of years older, save the save the fifteen sixteen
percent and you build premium and take an ordinary mortgage.
I mean, if we're after the cheapest option here stuff
the green mortgage, mortgage get the lower price.
Speaker 1 (12:49):
Yes, no, I would agree. And the good thing is
if you're buying something a few years older, you know
you'll you'll see you know what you're getting. Because a
lot of people, if they're buying and you build, they
get they get sort of sucked into the dream. And
and we've seen you build estates have been promised schools
or GP surgeries or a high street and they don't materialize.
And that is really difficult to sow because you're here
(13:10):
just based on marketing brochures. What we always say if
you're buying something you build, is make sure you get
absolutely everything in writing, so you've got some way of
coming back. If you've been promised car parking spots, it's
a cul de sac, whatever it is, make sure you
get everything in writing.
Speaker 2 (13:27):
It seems to me that one of the things that
we're really talking about here is the sense of community.
So if you buy an old house, and particularly if
you buy one in a in a town or village outskirts,
so if you can already see what the community is
going to be like, so you can know if you've
got a pub, you've got a shop, what kind of
other people live in the area, etc. You get some
sense of how you're going to live when you buy
(13:48):
an older house, whereas when you buy a new house,
as you say, you're buying a brochure, not a reality
or not a community.
Speaker 1 (13:54):
That's true, and it's it's very hard to price that
in so you don't know what it's going to be like.
You've got no comparables. So if you're buying an older property,
you can look on land registry and see what other
people are paying for it. You could see if you
could do it up, put an extension in a loft conversion,
you can add value to it. But if you're buying
into a completely new development, there's no comparables to see
(14:15):
is that going to increase? And that's where you really
need to do your research properly. Not all developers are
the same, you know, you want to see that the
developers that maybe hold their resale value. There's a lot
to think about.
Speaker 3 (14:28):
Actually, was something I wanted to ask about, is you
know this ten years guarantee that you get with a
new built home, Because in my experience, everything to do
with property is the most caveat emptor thing you will
ever buy in your life, and there is no comeback.
Or in anything at all, So I'm just want to done.
That is the guarantee actually both very much.
Speaker 1 (14:49):
Yeah, it's it's really limited. So the first two years,
you know, the developers should have, you know, do the
snags and things like that. And that's why we always
say make sure you get a snagging survey. Diorize that
two your points, because if you don't get anything fixed
before then you might be a bit stuffed because between
years two and ten it's structural. So it's really structural stuff,
(15:13):
and there's also ways of invalidating, so if you decide to.
We have a situation somebody came to our site they
changed the radiators. You know, a young couple bought a
new bill. They just wanted to sort of have nicer radiators.
They invalidated that warranty when they found out the boiler
and there's problems with that. So it is really tricky.
So I would say again, you know, make sure you
(15:35):
know you now can get pre completion inspections. And it
seems a bit odd that you're buying something you don't
expect to get a mechanic to buy a new car
to look over it, but in this case we probably
did it's not all the same, so it is a
bit bonkers.
Speaker 2 (15:51):
God, there's so many reasons to loathe house builders. It's insane.
Isn't The other thing that I worry about with new
bills it's the size of the rooms. And when you
look at houses built even up until the fifties, sixties,
and particularly even council housing for example, built in the
nineteen thirties, the rooms are big and spaceous in light,
(16:12):
et cetera. But when you look at the floor plans
of new built you often see really very small floor space,
small small rooms, and that seems to me to be
something of a concern.
Speaker 1 (16:24):
Yeah. No, and they even do things like put in
tiny furniture, or they might not have wardrobes in there.
You don't have built in wardrobes. And one of the
reasons why, because they're building for profits. So and we
we market our rooms our houses on based on number
of rooms in most other countries of European countries is
square footage. So then you could be able to compare
(16:44):
you know, a two bed Victorian flat to which might
be the same space as a you know, a small
three bed house, So I think it is. And that's
where you know, you want more information and we're really
much wanting as much information on If you're looking at
right Movements Zoo in the property portals, they are actually
we did some research earlier this year they're actually doing
more on that. So you can look at the floor plans,
(17:06):
you can look at the square footage and do the
sums yourself. What's the price per square footage you're paying for?
This slightly takes us.
Speaker 2 (17:14):
Back to use a buying agent who knows all this stuff,
not back to we haven't we haven't done that episode.
Speaker 1 (17:19):
Yeah, because in other countries you buying agents and estate agents,
you know they're working on behalf of the seller. The
buyers aren't aware of that. But you know, with the
affordability so stretched, buying agents seem to be for the
rich and the time pouring cash rich. But yeah, no,
and that's why with our site, that's what we try
(17:39):
to do. We try to empower people, get them to
ask the right questions, you know, making the right choices
and avoid the pitfalls of others.
Speaker 3 (17:47):
Don't know if Paula, if you would want to discuss this,
but obviously you have been within nothing distances the levels
of power in the government and I don't know if
there's anything from that experience that you would want to see,
like how we've ended up here if.
Speaker 1 (18:02):
You like, yeah, I mean it's it's interesting because that's
why I set up Homeowners' Alliance actually, because I was
working in government and housing and I was being approached
by you know, some big developers saying, oh, we don't
need to do inspections. You know, consumers don't want to,
you know, they want to save money. And I couldn't
get a voice of the homeowner. I couldn't go out
(18:22):
and ask people say, do you really want, like you know,
something to come and inspect the work that you're builder's
doing or whatever. So, and that's why I felt there
wasn't a voice for the homener and those aspire to own.
So we're not just a homeowning club. We're very keen
on you know, helping as many people get onto the
property ladder. And that's why I set up as to
be this voice. When we first started the first sources
(18:43):
of complaints to our site, it was on new build
estate agents and leasehold and it still is the case
that they come to us because they've got nowhere else
to go. So that's why we're here, that's why we exist.
Speaker 2 (18:57):
Okay, thank you. Well, I think we've some that up
pretty well. I'm going to try and sum up the
positives of buying a new build.
Speaker 1 (19:05):
Okay, here we go.
Speaker 2 (19:07):
Energy efficiency, modern design, be that a good thing or
a bad thing, a warranty that may or may not last,
common spaces that may or may not long term destroy.
Speaker 1 (19:20):
The value of your house.
Speaker 2 (19:22):
And finally, no change, no change, and possibly free carpets.
So that's new built plus points of older houses. You
know what you're getting. You might get some character, bigger
floor plans, you might get a bigger garden, and it
might even have some plants in it. That seems like
a good thing, and you won't lose quite so much
money quite so fast, depending on where the market goes.
(19:44):
Is that fair? Is that going to cover it?
Speaker 1 (19:46):
That covers it? I guess. The only thing with older
builds is that you know, you might have lots of
maintenance costs. I live in an older property and I'm
always shocked at how much things cost when I'm having
to do things up. Yeah, but you can also add
value with older bills. You can you can increase the
value easily.
Speaker 2 (20:02):
Okay, So I will just say one last thing, which
is that we do live in an older house and
when we moved in, here's back to your cost of maintenance.
The bathroom ceiling fell down in the kitchen, so you
know it's not all upside. Paula, thanks so much for
joining us and bringing our expertise to the show.
Speaker 3 (20:19):
We really appreciate it.
Speaker 1 (20:21):
That's been good fun. Thank you.
Speaker 2 (20:25):
Thanks for listening this week's Merren Talk to Your Money.
If you like us show, rate, review, and subscribe wherever
you listen to podcasts. Also be sure to follow me
in John on ex or Twitter at Marinus w and
John Underscore Stepic. This episode was produced by Summerside and
Moses Andam sound designed by Blake Maple's Special thanks, of
course to Paula Higgins. Questions and comments on this show
and all our shows are always welcome. Our show email
(20:46):
is Meren Money at Bloomberg dot net.
Host
Merryn Somerset Webb
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