New builds in London can save buyers up to £7k a year

The so-called ‘price premium’ on new builds has long been a contentious issue. First Time Buyers pay, on average, 12% more of their hard earned cash to secure a new build property, which critics have argued is simply price inflation caused by the popularity Help to Buy.

There have even been murmurings that high service charges are deterring buyers from a shiny new home, especially in the capital.

The standard retaliations are that the value of a new build rises more quickly than that of an existing property, a 10-year warranty trumps the hefty repair bills that can come with an older property, and a new build’s green credentials are a carbon-friendly way to cut bills.

However, housebuilders have made very little noise about how a new build property can add to their owner’s purse on a daily basis. Given that a London dweller can save thousands on their lifestyle in a new build block, housebuilders could be missing a major marketing opportunity.

London’s new build sector is continuing to evolve to offer more in-house services and amenities to the capital’s buyers in an attempt to battle Brexit uncertainty and beat the competition.

Research by Stone Real Estate looked at the annual cost of eight of the most common and sought after new build amenities regularly included in London developments today, and how this cost stacks up compared to the difference in price between the average new build property and the average cost of existing stock.

According to the latest Land Registry data, the gulf between new builds and existing homes in London is currently £26,691. How can buyers be persuaded to part with an additional £27k? Once you add up the amenities, it’s not a hard sell.

How a new build can save its owner 7k:

• Resident’s lounge: London is home to some very expensive spaces to work and relax, even the most affordable private members club will set you back £150 a year;
• Free Wifi: an average saving of £376 a year;
• A free gym in a new build development can save as much as £462 a year in membership fees;
• Using a concierge service for just one hour a week would cost £472 a year;
• Going to the cinema just once a week would cost £600 a year;
• Even the cost of paying for additional storage that now comes as standard with many new builds could total £692 a year;
• Perhaps the two most sought after and expensive amenities included in today’s new builds are a creche and a parking space, and it’s easy to see why as paying for this separately can cost over £2,000 a year each.

All in all, just the cost of these eight services and amenities can total more than £7,000 a year!

Based on the cost of the average London new build, it would take new build homebuyers in the capital just 3.8 years to recoup the difference in house prices through the use of the additional amenities a development might offer.

This, of course, varies across London, and while it would take almost 20 years in Redbridge, it would take less than a year in Southwark or Wandsworth, and in fact, there are a total of 14 London boroughs where the average new build house price is lower than existing stock and so buyers are benefiting from this value straight off the bat.

Founder and CEO of Stone Real Estate, Michael Stone, commented: “Buying new isn’t just beneficial in terms of the standard of home your buying, which in itself is arguably worth the premium, it’s also about the wide range of benefits that now come with a modern-day development.

“While not every development will offer the same incentives, they will all include additional draws above and beyond the property itself that enhance the life of a London home buyer in some shape or form. It can be as simple as a transactional incentive such as paid stamp duty, or a lifestyle benefit like a free on-site gym, creche or even a more traditional benefit such as a parking space.

“Some of these benefits may sound insignificant in terms of cost, but once you start to add them all up, you’re paying quite a substantial amount of money and so to have these already taken care of under one roof is something that buyers really go for in today’s market. After all, it’s not just about cost-saving, but convenience and ease of lifestyle as well.”