New build vs resale property: which is the best choice?
If you have recently visited or you live on the Costa del Sol, you will have no doubt noticed how many new developments have been built or are being built in the area. Especially in the last two years, new-build completions have soared and we’ve noticed a huge increase in buyers only looking for brand new properties.
But does brand new necessarily mean it’s the best choice? As a family, we have bought both a resale property and an off-plan property, and as a real estate agency we have sold our clients homes in both; each option has their pros and cons and we’ve had good and bad experiences with the two. It’s incredibly important you weigh up these pros and cons before making a decision on what’s best for you.
THE APPEAL OF A NEW BUILD
One of the most attractive aspects of a new build property is quite obviously the fact it’s new. You move into it with that brand new-home feeling and most developers allow the opportunity to customise the property to your style – to an extent. This makes moving in to your new property much easier.
Once it’s ready, a buyer can move straight in without the need to spend time and more money on renovating the property to their standards.
As a buyer, if you’re able to get in at the beginning stages and buy the property off-plan, this will guarantee you the best price. After this, the price can increase dramatically. To give you an example; the new build property we bought off-plan in 2019 was priced at 380.000€ (without taxes). Now, the exact same apartment next door to us was sold once already built in 2021 for 580.000€ (without taxes). That’s over a 50% increase!
So, does this mean new build properties are more profitable than resales? If the location is right, then absolutely yes.
THE DOWNSIDE TO A NEW BUILD
A very important thing to understand (and one we have definitely learnt through our own experience and that of our clients) is that just because it is brand new, does not mean it will be perfect when completed.
Due to multiple issues, we moved in five months behind schedule and once we moved in, there were still issues that needed to be fixed and are currently being fixed. For a start, the lift in our block didn’t work for at least six weeks and being on the top floor, you can imagine how many trips we had to take up and down those stairs with heavy luggage, furniture, clothes and even a treadmill.
Alongside this, there is an on-going “snagging” list that the builders need to address, including a lack of water pressure, scratches and marks on the wall, a broken window latch and a faulty air-con unit. The good news however, is that as a buyer you do have protection from the developers and they are responsible for addressing these issues.
I mentioned above that buying a new build property in a great location makes it an incredibly profitable investment. Even though this is 100% accurate, one of the biggest issues now and a potential downside to new developments on the Costa del Sol is that most of the best locations and land have already been taken and built on.
Something else to be aware of as a buyer is that there is a 10% new build tax on top of the price of the property. Once you factor in notary fees, stamp duty, lawyers’ fees etc., this percentage can increase to as high as 14%.
RESALES: THE PROS
With resale properties, the greatest appeal is being able to see what you will get before you spend the money. You can check out the views, where the sun hits at different times of the day, how close it is to your work and your favourite restaurants. As it is already built and set up, you can focus more on choosing the perfect location for you and/or your family.
Resale properties also give you the opportunity to turn a house into your dream home, especially if you enjoy renovating and making something completely your own. Our first home in Spain was a resale property and if you could see pictures of it when we first bought it to how it is now, you wouldn’t even recognise it. It’s a process, but a satisfying one.
Another pro to this option, is that the tax on a residential property sale is lower than that of a new build. As of October 2021, the Andalucian government cut the resale tax rate to a flat fee of 7% which is now extended until the end of 2022.
RESALES: THE CONS
Where you may save money in taxes when buying a resale property, you could end up paying out more for repairs if the house has any underlying issues. Some resale properties have been around for 10+ years and therefore, can present problems further down the line. You can however, get a survey done to minimise this risk.
The majority of homeowners will want to renovate or change parts of the house when it’s a resale to their own style and preference. Of course, this is going to incur extra costs and time for the buyer and depending on the nature of the works being done, you will need to obtain a building license from the local town hall – which is not always straightforward and it is not free.
The reality is there are pros and cons to both new build and resale properties; nothing is ever going to be perfect. It’s important to understand what they are and then consider them carefully before buying. In my personal opinion, I would put more of your focus on location – it’s all about the location. Whether it’s a brand-new property or a house that has been standing for 20+ years, if it’s in a good location it’s a profitable investment.