Whether buying a car, sofa, tailor-made suit or buying a vacation home, for some people only brand new will do. Other people fall for something with charisma and authenticity, something with history and soul.
On this page, we will discuss the advantages and disadvantages of both new construction and existing construction!
Table of Contents
- 1 Advantages of buying a vacation home that is newly built
- 2 Possible pitfalls when buying a new building as a holiday home
- 3 Advantages of buying an existing building as vacation home
- 4 Possible pitfalls when buying an existing building as a vacation home
- 5 More info on foreign real estate
Advantages of buying a vacation home that is newly built
It is of course attractive to become the owner of something that has never been used and decorated by anyone else. It evokes a wonderful feeling of unspoilt nature.
If you choose to build a new house, this unspoilt nature offers some undeniable financial advantages. When buying a vacation home that is newly built you can, in many cases, enjoy:
- Construction guarantee (10 years in many cases)
- Free repairs during the first years after purchase
- Lower insurance costs
Other advantages of buying a vacation home that is newly built are the following:
High quality new build - Buying a vacation home
An additional advantage of a new building is that your second home will probably be equipped with the latest technologies and fashionable finishes.
The construction quality of a new building is also higher than, say, a property built a decade ago.
Most potential buyers do not like outdated or demoed properties. They prefer new generation properties!
Better and more practical rental potential - Buy second residence
A brand new building also offers great advantages if you plan to rent out your vacation home professionally as a buy-to-let property.
A new building can be considered a cash cow. All other variables aside, a new building can provide a larger and more stable incoming rental cash flow than an older property.
New attracts a large crowd of potential tenants and guests and very often includes the latest integrated technologies and home automation.
A new building is also more practical to rent out than an existing property.
It is the type of income-producing property that should give you the least worries in terms of maintenance, defects and wear and tear.
More flexibility in terms of layout and design - Buying a vacation home
Another advantage of buying a vacation home on plan or under construction is that in many cases you have more say in the finishing or even the design and division of your new outdoor shelter.
Buying in a complex gives you the advantage of being able to choose the location and planting of your outdoor area in that complex. The exact piece of land you choose can play a big role in an eventual sale!
Estates built on land at the far end of a complex may sell more easily than those built on a piece of land in the middle of the complex.
Possible pitfalls when buying a new building as a holiday home
VAT - Buying a vacation home
As a buyer of a new building abroad, you may have to pay VAT. However, in certain cases you are able to reclaim (part of) this VAT if you rent out the property.
Keep this in mind, as it is often a considerable percentage of the value of the new holiday home.
At the French luxury Wyndham Halcyon Retreat Golf & Spa Resort, you can claim back the VAT paid thanks to the French VEFA scheme.
For investors, this therefore remains a VAT-neutral investment (you must advance the VAT but it will be refunded in full afterwards).
Be careful when selecting the right holiday accommodation. Investigate whether the project developer or builder has a good reputation and is trustworthy or not.
Even if you wish to buy a foreign property for mixed use or with a rental guarantee, it is important to carry out your due diligence [AVAILABLE SOON] thoroughly. After all, doing your homework thoroughly is what makes or breaks the purchase of an investment property [AVAILABLE SOON].
Budgeting is important when buying a vacation home
When it comes to budgeting, it is very important to communicate clearly with the seller of the newly built vacation home. You need to have a crystal clear understanding of the cost structure of the holiday accommodation.
Which costs are included in the purchase price and which are not? Does the price include a finished kitchen? As a buyer of a new building, you should also watch out for expensive packages of furniture!
As a buyer of a new property, you run more risk in this area than as a buyer of an existing property. Examine the financial side of the matter to the bone. That way you avoid unpleasant surprises!
Advantages of buying an existing building as vacation home
Authenticity and character
Some people are looking for something with charisma, something with character, something with soul... For these people, a new building can never match a classic house with a specific history.
Decades of wear and tear and use can give a property that special look. Think, for example, of an old stone floor that has been polished by several generations of owners.
It is precisely the unique story and the aura of such a property that attracts certain buyers and tenants. Think of a beautiful historic house in Italy with original terracotta tiles, oak beams and even frescos.
French country houses with charm in the Limousin region
In the luxurious Wyndham Halcyon Retreat Golf & Spa Resort you can currently buy a fantastic holiday home in France.
You become 100% owner (full ownership) of the charming renovated or newly built properties and enjoy a fantastic mixed-use formula:
- Four weeks per year free personal use in both high and low season
- Guaranteed annual returns through an ascending system:
- 5% for the first year
- 6% for year 2 to year 6
- 8% for year 7 to year 11
- Optional resale guarantees:
- Sale at minimum 125% of original purchase price after 5 years
- Sale at minimum 150% of original purchase price after 10 years
Greek-style holiday homes with a touch of modernity
On the green island of Samos, surrounded by the azure Aegean Sea, you as a private investor can become the proud owner of a country house in the Hera Bay Luxury Resort on Samos.
You can choose from luxury hotel suites, studio flats, campanas and three types of luxury villas, with or without private pools.
All vacation homes offer spectacular views of the bay and the sea. It is a mixed-use formula, which means you experience the best of both worlds:
- Free own weeks private use
- Guaranteed annual return, calculated on the purchase value of your property
Montenegrin new build property in unique location in Tivat
Montenegro is a unique tourist growth destination with a wonderful mix of natural beauty and culture.
As a private property investor [AVAILABLE SOON], you can become 100% owner of newly built studios and flats in this small-scale luxury residence in Tivat, ten minutes from the international airport.
As the owner, you have the choice: 100% private use without yield benefits or opt for mixed use.
In the latter case, you can use your buy-to-let property for free for 6 weeks per year, and for the remaining weeks your property will be included in the rental programme of the residence.
This then provides a variable return (9% gross on an annual basis if an occupancy rate of 45% is achieved on average).
Opportunity to inspect and soak up the atmosphere
Purchasing an existing property also gives you the opportunity to establish how the property functions as a home and in the surrounding area. Do you have a good feeling in the property? How does the neighbourhood feel? And the local neighbours?
You cannot make these determinations for properties that you buy on plan and that are not yet there.
Possible pitfalls when buying an existing building as a vacation home
Watch out for hidden defects. Go and inspect the property in question before you buy.
If necessary, have an independent expert examine the house.
In general, you can assume that the older the house is, the greater the risk of hidden problems. For example, moisture in the walls may be covered up with a fresh lick of paint, and so on.
Always check whether an existing property still conforms to modern building regulations. Also check if there have been any building violations in the past and what the possible cost of a regularisation would be.
This would allow you to check whether the correct building permit was obtained for certain modifications or extensions. Engage a local lawyer for this purpose and avoid a cold shower in the future!