TIPS FOR BUYING A NEW BUILD HOME

A new-build property is one that's brand new and has never been lived in.

You may sometimes see fairly new homes but have already been owned and lived in by someone else described as 'new-build', but this guide is about houses and flats that have not yet been bought or lived in by anyone.

New build homes are a great option whether you're a first time buyer, have a growing family, or "right sizing" in later years. But there are also common problems many home buyers aren't aware of when buying a new build.

One of the main benefits of buying a new-build property is that, initially at least, it's less likely to require the same level of maintenance that you'd face with an older property. Your energy bills may well be cheaper, too, given that they are usually better insulated than period homes.

If you're buying off-plan (i.e. before it's actually been built), you may also be able to choose certain aspects of the design.

The other advantage, if you're in need of financial help, is that the Help to Buy equity loans scheme - where the government lends you a percentage of the property price - is only available on new-build properties. The government's First Homes scheme is also only available on new-builds.

However, there can be some disadvantages to buying new-build homes, including snagging problems when you move in and difficulties getting a mortgage.

The benefits of buying a new build home

New build homes are appealing to home buyers for a number of reasons:

Many people like the fact that they will be the first to live in the property.
Repairs and redecoration costs should be minimal for the first few years.
Buyers can often select fixtures and fittings to tailor the property interior to their taste.
New properties usually come with guarantees as well as NHBC’s 10-year warranty, other companies provide warranties and insurance for new homes, such as Local Authority Building Control (LABC) and Premier Guarantee.
If the property is built to the correct standard, homeowners can enjoy lower running costs and energy bills.

What's included in a new-build property?

One of the great advantages of buying a brand-new property is that, often, many of the fixtures and fittings you'd otherwise have to fork out for are included in the price.

Exactly what's included varies depending on the developer and what they are offering. You may (though not always) get washing machines or dishwashers thrown in, as well as wooden flooring or carpet.

Developers will often try to upsell you extra items. Be wary here - the price of these could be inflated, so it may be much cheaper for you to source and pay for them yourself.

Today's building rules and regulations also mean that there are standards developers have to meet to make your property as energy-efficient as possible, helping you save on bills.

This means that energy-efficient features such as double or even triple-glazed windows, insulated walls, roofs, and doors, and energy-efficient heating are all common in new-build properties.

Developer customer service

Whether you’re buying a toaster or a new home, the transaction and after sales care can vary. Trouble is, of course, you’d expect a better level of service when you’re spending hundreds of thousands on your home. Sadly, developers don’t compete on quality and after sales service. So, when you are looking at buying a new build home, it’s down to you to do your research. Here are our top tips:

Get to know the developers in the area where you want to buy and research them online. Look out for where they are mentioned in local forums and see what people are saying. Don’t let it put you off completely but use this information to ask the right questions.
Get talking. If the development has been partially completed, ask the neighbours how they found the process of buying their new build home. You might pick up some top tips for negotiating and things to watch for in your contract.
Visit the developer’s other sites. How do they look? Do the new residents speak highly of their homes and the developer?
Never rely solely on the developer’s promotional material. Get a feel for what you’re buying by visiting the site and the local area. Look at transport links, do your journey to work, walk to local facilities and so on.
Don’t be pressured into using the developer’s conveyancing solicitor. It’s not uncommon for the developers’ solicitor and sales team to exert huge pressure on you to complete, even where there are clear conveyancing problems. If you have a good, independent conveyancing solicitor, they are less likely to bend under pressure from the developer and act in your interests.

New build premium pricing

Just like a new car, a new build house or flat will depreciate in price the minute you turn the key in the door. Even in a rising property market, you may not get your money back when you buy a new build home if you have to sell within a year or two. Here are our top tips for tackling this:

Compare the new build home you are looking at with similar “old” properties in terms of value, space and rental value in the local area. Check the price per square foot. Compare it with the resale market so you understand the extent of the premium you will be paying.
Negotiate with the developers. Find out what other properties on the site have been sold for on Zoopla, Rightmove or at the Land Registry. There can often be deals to be done at the end of their financial year, or when there are only a few properties left to be sold.
Shop around for good deals. Many developers offer incentives to differentiate themselves from other local developers: free furnishings, a car parking space, or paying your legal fees or stamp duty. If you can’t negotiate money off the price, the offer to pay your stamp duty is likely to save you the most money. Be aware that incentives offered by the developer over about 5% impact how much your mortgage provider will lend.
Plan to stay put for a few years. Future proof your purchase by ensuring it fits with your personal plans for the next few years. Could your new partner move in? Could you comfortably fit a new baby in?
Think about adding value. When buying a new build home, think about whether there is scope to add value. Can you add a conservatory, a landscaped garden, or loft conversion? You may not be able to afford it now, but it may be an option in the future and make your home more attractive to future buyers.

Delays in the process of buying a new build home

Delays are common, particularly if you are buying “off-plan” — before the development has been completed. We recommend you get the builder to agree to a ‘long stop’ completion date which means they’ll be liable to pay you compensation if they don’t finish the work by that date. Check out our guide ‘buying off-plan’ for more advice.

Getting a mortgage on a new build home

If you are not a cash buyer and are getting a mortgage to buy your new build home, delays can also be a problem when it comes to your mortgage. Take a look at advice on getting a mortgage for your new build home.

Leasehold vs Freehold

Whether your new build home is freehold or leasehold is fundamental. Leasehold means that you have a lease from the freeholder to use the home for a number of years. The leases for new build are usually long term. Often 90 years or 120 years and as high as 999 years.

There are often certain conditions attached to a leasehold property. Restrictions can include obtaining your freeholder’s consent for alterations to the property, sub-letting and owning pets. Some can be reasonable and sensible especially if you are buying a flat. Leaseholders are responsible for paying for maintenance and buildings insurance, and usually also have to pay an annual ground rent, as well as fees to the freeholder, such as when you remortgage or wish to do building works.

If you are buying a new build flat, you will have no choice but to buy it on a leasehold basis. You need to ask the developer and your conveyancing solicitor to walk you through the terms of the lease, what restrictions are included and what charges apply now and in future years.

New build houses should not be sold as leasehold. Our campaigning in this area led to the Government committing to ban the selling of new houses on a leasehold basis and for ground rents on all new leasehold properties to be set to zero. This proposal has not yet come into law. There is more work to reduce the cost of leasehold extensions.

Seek advice from Estate Agents

If you’re looking for advice and mortgages, contact us! You can visit Fortess Homes for available new home builds properties.