If you are looking for a home, but you don’t know whether to opt for a second-hand or new-build one, don’t worry, below we will analyze the advantages and disadvantages of both options so that you can make the decision based on your needs and preferences.
What types of housing are there currently?
There is a wide variety of homes on the market today, from traditional second-hand properties to the most modern and luxurious new-build homes. But which is the best option for you?
To begin with, we must know the difference between the two, and that is that a new-build home is one that is purchased directly from the developer; while a second-hand home is one that has already had at least one owner.
We will analyze the differences between these two types of housing based on certain factors: price, location, time to move in, materials, necessary renovations, energy efficiency and taxes.
The price per square meter
According to the Appraisal Society, on average, the square metre is between 5% and 10% more expensive in new-build homes. That is, for the same price you can access a used home with more square metres than if you buy a new-build house in the same area.
However, when it comes to an off-plan purchase, the down payment and the first payments will be made before receiving the property, and it may take a while to receive it while the construction is being completed. It is advisable to have legal advice to verify that the agreement between the parties includes the guarantees that protect you as a future owner in the event of non-compliance or construction defects.
Regarding the mortgage, the bank does not decide based on whether it is a new-build or second-hand home, but will take into account the appraisal value. Currently, banks do not give more than 80% of the appraisal value except in some cases, but you can opt for the subrogation of the mortgage if it is a home under construction.
The location
If you want a very central area, you are more likely to find more second-hand homes than new-build homes, since the latter are generally located on the outskirts of the city, while second-hand homes are found in all neighborhoods.
Availability and time to move in
Except for new turnkey constructions, when buying a new-build flat you normally have to wait until the construction is finished. On the other hand, in second-hand housing, access is granted at the time of formalising the sales contract. If you are in a hurry to move, new construction may not be the best option for you.
The finishes
Comfort and aesthetics must also be taken into account. Some modern homes offer all the amenities necessary for daily life, as well as having attractive and elegant designs.
In new construction, buyers are usually consulted when choosing the materials and finishes for their future home (doors, flooring, materials and colours in the bathrooms, etc.). In a second-hand home, this option is not available, since you buy the home as it was left by the previous owners.
Renovations to move in
In a new build, the property is brand new, so it does not need any improvement work. On the other hand, a second-hand property is much more likely to need renovations or reforms (painting, changing the floor, renovating the kitchen, etc.). This is why many people wonder whether it is better to buy a new build or carry out a complete renovation.
Energy efficiency of housing
New-build homes, being more recent constructions, have a higher energy efficiency than second-hand ones. According to the Technical Building Code (CTE), new buildings must guarantee “rational use of energy” and have:
- Thermal insulation
- Low-consumption lighting
- Guarantees: the Building Regulations Act (LOE) establishes that all new buildings must have the following guarantees:
- 10 years for structural defects
- 3 years for defects affecting habitability
- 1 year for defects in the construction finishes
Taxes
In Spain, the VAT on second-hand homes is 10%. This means that if you buy a house for 200,000 euros, you will have to pay 20,000 euros in VAT.
Once you have decided whether you want to buy a second-hand or a new-build home, you have to think about the costs. The costs of a second-hand home are generally higher than those of a new home, since you have to take into account the condition of the house and possible renovations.
The main expenses of a second-hand home are:
- The price of the property: the price of second-hand homes is usually lower than the price of new-build homes, although you should take into account the condition of the property and possible renovations.
- Notary and registry fees: these are the same for both a new-build home and a second-hand one.
- Insurance: When you buy a new-build home, insurance is usually included in the price; however, when you buy a second-hand home, you must take out your own insurance.
- ITP (Property Transfer Tax): This tax is always paid when a second-hand home is purchased, although its amount varies depending on the Autonomous Community where the property is located.
- Agent fees: If you decide to hire the services of an agent for the sale, you must take into account the costs of their fees.
The person responsible for paying the costs is the buyer of the property.
On the other hand, in new construction properties, VAT must be paid, which is set at 10% of the amount recorded in the deed, in addition to the IAJD (Tax on Legal Documents).
Advantages and disadvantages of buying a second-hand home
Buying a home is a big investment, so it’s important to consider all the factors before deciding whether to go for a new build or resale property. Resale properties may be cheaper, but what guarantee does that provide?
Advantages
- Price: One of the main advantages of buying a second-hand property is the price. In general, this type of property usually costs less than a new one.
- Location: Often these properties are located in more stable and developed areas than newer ones, which can mean better access to public services.
- Stability: Once you have purchased a second-hand home, you will be able to enjoy greater financial stability. This is because the initial price will be much lower than that of a new-build home, so you will have more money to spend on other projects and you will also have greater chances of obtaining a good return in the long term.
Disadvantages
- You won’t always be able to customize it: If you want to change something in your new home, you may not be able to do so, especially if the changes affect the structure (for example, knocking down a load-bearing wall, etc.).
- It may be in poor condition: Unlike new-build homes, second-hand homes have been used by other people for years. This means that it could be in worse condition and need expensive repairs, but it will all depend on the maintenance the home has received and the year it was built.
- Maintenance costs: Second-hand homes may require a higher amount of maintenance to keep them in good condition. This could mean higher costs for the owner in the long run.
- Complete documentation: It is important to check all documentation to ensure that there are no legal or other issues related to the property. This can be a somewhat tedious and costly process if not done properly.
What is better to buy: new construction or second-hand housing?
As we have seen above, there are pros and cons to both, but we will summarize them to help you make the best decision for you:
- Buying a new build home can be more expensive than buying a resale home, but it can also come with some advantages. New built homes are usually in better condition and have fewer problems, meaning you can enjoy your new home from day one. Another advantage is that these homes are usually covered by a builder’s warranty, so if any problems arise, they will be easy to fix.
- Buying a resale home is often cheaper, but it can also result in higher expenses if there are repairs and upgrades needed. However, it’s important to remember that older homes have their own charm and can offer unique features not found in new construction. It’s also important to note that buying a resale home will allow you to enjoy lower taxes, as the value of the property has generally decreased over time.
Ultimately, the best option for you will depend on your personal needs, budget, and priorities. If you want to save money and are willing to fix up the home little by little, or invest in a renovation before moving in, then a second-hand home could be a good option. In addition, some second-hand homes are already ready to move into and do not necessarily need any kind of repair. It is best to go deeper into your search and not settle for the first one to ensure that you are buying the ideal home.
