Across the UK, new builds sell for about a third more than second-hand homes on average. Some of that gap is the home itself: new homes are often bigger, more efficient and come with a warranty. Some of it is how the price is put together, and how developers protect it. Knowing both helps you judge whether a price is fair and where you have room to negotiate.
A developer prices against the market, not its costs
A developer does not add up its costs and put a margin on top. It looks at what similar homes nearby have sold for, both second-hand and on other new developments, and at how quickly it needs to sell. The costs decide whether a site is worth building at all. The local market decides the price.
That price also has to survive a mortgage valuation. Your lender's valuer checks it against evidence of recent sales. If the valuation comes in below the price, the lender lends on the lower figure and you have to make up the gap or renegotiate.
What the price pays for
The money from a sale covers the land, the build itself, the roads, drainage and utility connections on the site, and the contributions the council requires for planning permission. Those contributions come as planning obligations, often called Section 106 agreements, which can fund affordable homes, school places or road improvements, and in many areas the Community Infrastructure Levy.
On top of that come sales and marketing, show homes, finance costs, the company's running costs and, last of all, its profit. Land and planning costs vary hugely from site to site, which is one reason similar homes can be priced very differently a few miles apart.
How much is profit
Public housebuilders publish their margins. In 2025 Persimmon reported an underlying operating margin of 14.3% on an average selling price of £278,203, and Taylor Wimpey an adjusted operating margin of 10.9% on a blended average price of £335,000. Operating margin is what is left from each pound of revenue after land, building and running costs, before interest and tax.
So on a typical big-builder home, somewhere around 11p to 14p in every pound was operating profit in 2025. Margins were higher in the years before 2023 and move with the market. Smaller builders do not usually publish theirs.
Why the price is so often 'plus incentives'
Every completed sale becomes evidence that valuers use for the next one. If a developer cuts the price of plot 12 by £15,000, the next buyer's valuer may use that lower figure, and the price of every remaining plot comes under pressure. Paying £15,000 towards stamp duty or a deposit keeps the headline price where it was.
That is why incentives are common on new builds. Lenders know this too. The developer has to declare incentives on the UK Finance Disclosure Form, which goes to the lender's solicitor and the valuer, and some lenders lend against the price minus the incentives. Treat an incentive as part of the price and compare it with what a straight reduction would be worth.
Where you have room to negotiate
Room usually opens up at the end of a phase or a development, at the developer's financial year end, and on plots that have been finished and unsold for a while. Show homes are often sold with furniture at the end of a site. Ask what is available, not just what is advertised.
Compare like with like. Look at what second-hand homes of a similar size nearby have sold for, using HM Land Registry price paid data, and check how the new build premium in your area compares with the national figure.
What to know
- New builds sold for about a third more than second-hand homes across the UK in the year to June 2026.
- The local market sets the price. Land, build and planning costs decide whether a site gets built.
- Big builders made about 11p to 14p of operating profit per pound of sales in 2025.
- Developers prefer incentives to price cuts because sold prices become evidence for future valuations.
- Incentives must be declared to your lender, and some lenders lend on the price minus incentives.
Questions to ask the developer
- What have similar homes on this development sold for in the last six months?
- Would you reduce the price instead of offering this incentive?
- Which plots have been finished longest, and is there more room on those?
- When does this phase finish, and are prices going up on the next one?
- Will you put the full incentive and its conditions in the reservation agreement?
Sources
General information only, not financial or legal advice. Rules and offers change, so check the sources and your own adviser before you rely on a figure.