Should I Buy a House or a Flat?
The age-old debate between buying a flat (apartment) and a house continues to be somewhat of a dilemma for homeowners. Each option comes with...
New-build properties are very attractive to buyers, particularly first-time buyers, as move in, key-ready properties. Buying a new-build home can be exciting, but it can come with its own challenges. In this guide, we tell you exactly what you need to know about buying a new-build property so you can decide if buying a new-build […]
22 February 2023
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New-build properties are very attractive to buyers, particularly first-time buyers, as move in, key-ready properties. Buying a new-build home can be exciting, but it can come with its own challenges. In this guide, we tell you exactly what you need to know about buying a new-build property so you can decide if buying a new-build is right for you.
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When buying a new-build property, you will be getting new fixtures and fittings and appliances, many of which will be high-spec. You are also likely to have a choice of things like kitchen units and worktops. However, it is important to remember that some extras are upsold to buyers. For example, the fitted wardrobes in the master bedroom that you adore in the show house might cost extra. Even turfing the lawn in the garden may not come as standard, so it is always worth checking with the developer.
Whether or not you can negotiate on the price of a new-build property will depend on where the development is, what stage the build is at and how quickly properties are selling. A developer may be more inclined to strike a deal on a property that hasn’t sold rather than a plot that has a waiting list. When the development is in the early stages, you may also be able to negotiate a good deal with the developer to buy a property off-plan. Always research properties in the area before agreeing on a purchase price and remember: if the developer cannot reduce the price of the property, perhaps they can offer other incentives, such as stamp duty paid or carpets included.
Lenders are more strict on new-build purchases due to the risk that the property value may fall in the early years and, for this reason, may charge higher interest rates on mortgages.
New-builds do tend to come with a premium price tag, due to the fact they are brand new, with higher quality specs and are more energy efficient. Due to their premium price, new-builds can also lose value quicker than older properties, which may become a problem if you choose to sell.
Once you choose your property and pay a reservation fee, if everything runs smoothly, it should take around 4-5 weeks to get mortgage approval for a new-build property. It would be beneficial to speak to a mortgage advisor to get a mortgage on a new-build property, some of which are free of charge. Following this, your solicitor will start the legal work before you are in a position to exchange contracts. At the earliest opportunity, it is beneficial to request a long stop date.
A long stop date is a date that is agreed upon for the property to be complete no longer than this date, after which you can terminate the contract and receive your deposit back. Although you won’t need to get a normal homebuyer survey, it is recommended to get a snagging survey, which looks at any issues the builder may need to rectify. By having the snagging survey, should your builder fail to fix issues, this may result in you being entitled to be paid compensation.
Some developers offer part exchange on certain plots, which means you do not have to sell your home to buy the new property and the developer will buy it. Once they value your home, they will make you an offer, but bear in mind this is usually lower than you would put it on the market for as the developer will then need to sell your property. The value they pay for your home is then subtracted from the new property cost.
In 2019 the Government abolished leasehold ownership for new-build homes. This was done to prevent developers from maximising their profits by doubling ground rents in some cases. Now all new-build homes must be sold as freehold.
Many people prefer to buy a new-build because less maintenance is likely to be required in the years following completion, with new-build homes coming with a 10-year NHBC warranty. This makes them a popular choice for some landlords who want less hassle.
Many tenants also prefer a new-build property for this reason, which means a higher rent can be charged on new-builds.
New-build properties are also often better insulated, which means energy bills are likely to be less expensive and they have better EPC ratings (most have ratings A or B). With all buy-to-let properties having to have an EPC rating of c or above by 2025, this may encourage more landlords to purchase new-build properties in the future.
New-build homes often come with new appliances and technology. Some new apartment blocks also offer concierge and gymnasiums.
Nobody has lived in the house, which will also be an added incentive to prospective tenants if you are buying the property as an investment.
When buying off the plan you may be also able to get a discount on the price of a new-build property, have the developer agree to pay your stamp duty or legal fees or get extras thrown in such as carpets.
The First Home Scheme gives first-time buyers up to 30% off a new-build property on selected developments. The Shared Ownership Scheme is available o new-build properties and allows first-time buyers to purchase between 25% and 75% of a new-build home and pay rent on the remaining proportion of the purchase price. Terms and conditions apply, so we would advise researching the scheme in more detail.
New-build properties can be a blank canvas to the buyer, so you can choose fixtures and fittings such as kitchen units.
There is no upward chain and there may be an option to part exchange, which can make the process quicker and smoother.
Due to their premium price, new-builds can lose value quicker than older properties, which may become a problem if you choose to sell.
Also, lenders are more strict on new-build purchases due to this risk of devaluation and may charge higher interest rates on mortgages.
Even though people buy new-builds for less maintenance, many still have snags such as leaks, doors sticking and loose tiles. The good news is that until the site completes builders will be on-site and can fix the issues.
Buying on a new-build estate means you are moving to an estate where building work may still be taking place, so you may be without things such as the internet initially and put up with muddy roads.
New-build properties are a blank canvas to add your stamp to, but some would argue they lack character.
If being bought as a buy-to-let, due to the premium price, the rental yield may be less on a new-build property so this is something to bear in mind.
When buying a new-build, there are often delays, remember your house is not built so if the developer incurs any delays they are passed on to you, which means you may have to pay extra rent or storage costs.
New-build properties are also likely to be leasehold, which means you are likely to pay a ground rent charge.
Less land and a higher purchase price may limit the scope for improving or adding further value.
Room sizes can be smaller in new-builds, so always make sure your furniture can fit in the space.
Do your research, look online at reviews from previous buyers and check your developer is signed up to a code such as the Consumer Code for Home Builders or The New Homes Quality Code.
Clever trickery – Pay attention to room sizes and furniture that is smaller than normal, as well as clever lighting and accessories such as mirrors to make a room look bigger.
Always ask what exactly is included so you won’t get any nasty surprises like having no back garden lawn when you move in. Don’t be afraid to ask for these things to be included. You may not get them, but it’s worth an ask.
If the development already has residents it is worth speaking to them to get their impressions of the neighbourhood and developers.
Visiting other sites can give you a better idea of how the completed development will look and feel.
The promotional material is there to do one thing – sell. Especially when buying off plan, you need to try to get a real-life impression of as close to your home and your development as possible. If the development you choose does not have a show home of your chosen type, visit another site.
The developers may have a recommended solicitor, but, like with any house purchase, it is better to get a few quotes and use the solicitor that most meets your needs.
Additional questions to ask the developer:
Buying a new-build property is a slightly different process from buying an existing property and there are upsides and downsides. Now you know more about buying a new-build, check out whether buying a new one is a good idea and the hidden costs of new-builds in our blogs.
From mortgages and insurance to viewings, offers, exchange and completion, our Buyers’ Guide will take you through everything, step by step, from start to finish.
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