The latest survey from the Royal Institution of Chartered Surveyors reported robust growth in private housing construction across all parts of the UK. Official figures show that in England, house building as at the end of September 2014 was up 19% annually and RICS forecasts housing starts to rise again in 2015.
An encouraging trend for sure. However given demand and the boost to the market as a whole that changes in the stamp duty regime appear to have had, it is still well short of what is needed.
There are advantages and disadvantages of course to buying a brand new home.
Housing developers will often come up with great incentives such as paying whatever stamp duty is applicable and offering cash backs which can be particularly appealing to those on a tight budget. On the whole, the move should be as stress-free as possible with no property chain to contend with. New homes are well insulated making them more energy efficient and cheaper to run. They should be safer than older properties with smoke alarms, fire doors and the use of fire retardant materials and security is likely to be better as well as new homes often include security locks, burglar alarms and security lighting as standard.
The snagging is generally viewed as the biggest headache for homebuyers as new builds are often riddled with defects and it can take real determination on the part of the new owner to get the developers back to carry out the necessary remediation work.
However, the big advantage for owners of new homes that can outweigh the disadvantages is the 10-year warranty that most new homes come with. While they don’t guarantee the home will be snag-free, they do provide useful cover for the homeowner.
So given the better security and perhaps more advanced building techniques improving the overall sustainability of the property, is it cheaper to insure a brand new home than an older property?
There isn’t a simple answer I’m afraid. Some insurers will offer an enhanced premium discount, others won’t. Some apply a blanket discount regardless whether the property is brand new or just over 10-years old. For the intermediary, it comes down to getting as much information as you can about the property and the owner’s specific requirements and then shopping around.
However that doesn’t necessarily need to be an onerous job. Some general insurance providers have a range of options that can help you find the right cover for your client whether they are looking to insure their brand new home, their listed thatched cottage or their own eco-build. Many of the brokers we work with have been asking for a specialist new build household policy so The Source recently teamed up with UK General and Ageas for example to extend our range to include a new offer targeting properties less than 14 years old, tapering to a significant discount for properties less than one year old.
2015 may well see a surge in the building of new homes and so intermediaries may well experience an increase in demand from clients to help them find the right cover when they get their dream home. There are solutions out there to help you.
Kevin Paterson is managing director of Source Insurance
