Today we would like to compare the advantages and drawbacks of two ways of getting the home of your dreams. The first is to buy a plot and build a house from scratch; the second is to buy an old house and renovate it. What are the pros and cons of each option?
The advantages of building a house from scratch.
When you build a house from scratch, you can do exactly what you want, both in terms of the style of the house and in terms of its layout and how well it suits your lifestyle. Finally, you also decide on the specification you want for your home, based on how you are going to use it. In a way, it is like having a suit made to measure. What is more, by acting as a self-builder (autopromotor), you cut out the margin a professional developer adds to a new home, so you also save money compared with buying the same house on the new-build market. If you also decided to cut out the building contractor and hire the trades separately yourself, you could save the contractor’s margin too, although in that case you would need a project manager to take over the coordination of the trades that the contractor normally handles.
The advantages of buying an old house and renovating it.
To my mind, there are basically three. First, location may be a key factor for you, and there may be no plots for a new build where you want to live (central Málaga, for example). In that case, renovating an old house may be the only way to live where you want. Second, you may be looking for a sense of history that you can only get by restoring an old building. If you love old brickwork, timber coffered ceilings, rubble stone masonry or encaustic cement tiles (suelos hidráulicos), restoration lets you combine old and new, creating spaces you could never achieve in a new build. Last but not least, there is the financial side. During the crisis — and still today, though less and less — there have been opportunities to buy houses at prices you could never match by adding together the cost of a plot and the cost of new construction. It worked out far better to buy something existing and renovate it than to buy a plot and build new. This is because second-hand house prices are more elastic than new-build prices, as the property may come from an inheritance or its costs may already be sunk. During the crisis I worked as the architect on deals where I could hardly believe the sale prices when I heard them. Sometimes the properties sold for less than it would cost to build them today, without even counting the value of the land (sale prices of around €600/m²). In cases like these, buying something old and renovating it can definitely pay off, as the purchase price plus the renovation will clearly come to less than a plot plus a new build.
The drawbacks of building a house from scratch.
The main drawback is the uncertainty of the process. People are afraid of running into problems with the building permit (licencia de obras), of discovering that they cannot build what they thought they could or what they were promised, of construction costs going up, of delays during the build, or of problems at the end obtaining the new-build paperwork (declaración de obra nueva and licencia de primera ocupación) and the utility connections. It is true that taking charge of the construction yourself adds an element of risk, but that is precisely why it is cheaper than buying a finished home. If you are well advised, there is no reason why you should have problems, and if you do, they will be solved. That’s our job ;L)
The drawbacks of buying a house to renovate.
Everything we have said about new builds applies equally to renovations, although admittedly the administrative side can be somewhat simpler. In my view, the main drawback of houses that need renovating is that unforeseen problems may crop up during the works because of the condition of the old house. Many of you will have seen renovation programmes such as Love It or List It, where halfway through the works the builder and the interior designer tell the owner that they have found a rotten beam, or asbestos cement (fibrocemento), or services in worse condition than they expected, and explain the extra cost involved. The reality is that this can happen, and the only way to prevent it is, once again, advice up front and the most detailed survey possible of the condition of what you are buying before you buy it, so that there are no surprises. Among international buyers, for example, it is very common to commission technical due diligence or a survey of the house they want to buy, and it is work that comes into our office very often. That way they avoid surprises that can push costs up considerably. The biggest risks always come from the condition of the structure, especially in very old houses with load-bearing walls and timber-joisted floors.
In conclusion, I would say that, depending on the situation, both options can be advisable, provided we know the pros and cons of each one and you get good advice throughout the process.
