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What to think about when buying a new build home!

08 October 19 Author:Michelle Gaffaney

So, you have spotted a new build home that ticks all the right boxes but before you head down to the agents to put an offer on the table check out our tips and advice first.

Its an exciting time getting the keys to your shiny new home, and a big benefit of a new build home is that there should be no maintenance issues so you can move straight in. Other benefits of buying a new build are; that the energy bills should be cheaper, this is due to better energy saving materials that can be used during the build. Also if your buying off-plan it may be that you get to decide on some aspects of the design such as, the type of kitchen cabinets and tops, or the type of flooring throughout. Finally, if you need financial help there is the help to buy equity home scheme. This is where the government lends you a percentage of the property price which is only available on new builds.



What is included when you buy a new build?

This can vary depending on each developer, but generally the price of most new builds includes many of the fixtures and fittings. Some deals mean you will get the washing machine, dishwasher, all carpets and flooring thrown in. However, also be aware that some developers may try to upsell you some items at an inflated cost.

Remember as well that all developers have a standard they have to meet to make your home as energy efficient as possible due to building and regulations they have to follow. This means that your new home should come with energy efficient doors, roofs, walls, double or triple glazed windows, and heating as standard, saving you money on your bills.


Room for negotiation?

Generally there is always some room for negotiation on property prices. Whether your offer gets accepted depends on a few factors, such as the demand for that property, it’s location, and how far along the development is. You may be lucky if it’s at the beginning of the project and the developer needs more funds, or maybe when they are nearing completion and they still need a buyer. The key is to make sure you do your research, look at the sale prices of similar properties in the area. What you don’t want to do is fall into negative equity, never pay more then what you think it is worth. If the developer isn’t willing to come to an agreement on the price you could maybe try saving money in other ways, such as asking them to cover the stamp duty instead.

New-build premium – this term is used to describe the fact that new build homes are pricier then older, similar properties. This is because everything in a new build is brand new, energy efficient, and generally built to a high specification.



Choosing the right developer!

The easiest way to find new developments in your area is to go on Rightmove,  Zoopla, or similar and search new homes in a set radius. It would also be worth reading the house builders federation’s annual customer satisfaction survey. There you can see what star rating people have given a builder, the higher the star rating the better the company. It can sometimes be helpful to ask around too, if some of the development is already lived in, it may be worth asking the residents their opinion.


Can you part-exchange to buy a new build?

Some developers will run a part-exchange scheme allowing buyers to purchase a new build home using their current property as part payment. However there can be disadvantages to this;

  • Some developers will offer below the market value! Make sure you have a valuation done by a local estate agent first.
  • The eligibility criteria can sometimes be strict as well. This means you may only be allowed to fund up to a certain percentage of the purchase price with your part-exchange.

New build mortgages

It can be more difficult getting a mortgage for a new-build home as some lenders can put stricter limits on the value of a property to which they will offer a loan. This means the percentage you can borrow towards the value of the property may be restricted, whereas the lender may be willing to offer a bigger percentage on a older property. Another issue can be timing as mortgage offers only tend to be valid for 6 months which could be a problem if your property isn’t completed yet. Some lenders may extend the period of time your mortgage is valid but they will probably want to reassess your application. Getting advice from an impartial mortgage advisor should be your first point of call.


The Process:

Step 1 – Find the right home for you!

  • Do your research!
  • Look into the builders producing the development, what reviews do they have? Have there been any new stories about them?
  • Try and seek out the opinions of other buyers on that development, what was their experience with the developer?
  • Take the time to investigate the area; the schools, amenities, transport, and any other facilities you may need nearby.

Step 2 – Speak to a mortgage adviser and agree a mortgage in principle

  • Solicitors advise that you don’t exchange contracts unless you have your finances sorted first.
  • If your buying off-plan and your home isn’t built in the 6 month time frame that your offer is valid the lender may withdraw their offer. Your then committed to a purchase without having the finances to pay for it. You can then be at risk from the developer taking legal action if you can’t pay.
  • Speak to an independent mortgage adviser they can search the market for the best deals, and be able to advise you on what are your best options.
  • Check in to government help to buy schemes too as it may be that you could get some help with the funding from one of these.

Step 3 – Reserve your property

  • Once you have found your perfect home and got your finances in place it is time to secure your property this generally means paying a reservation fee. This could be from around £500 to £2000 and will reserve the property for 28 days generally.
  • If you fail to exchange contracts in those 28 days or sale falls through completely you will forfeit the reservation fee.
  • Check that your written reservation agreement sets out; the amount of the fee, purchase price of the home, exactly what you are buying, when the agreement ends, and T’s & C’s that will apply should the purchase fall through.

Step 4 – Appoint a conveyancing solicitor

  • There are legal points in buying a property that only a qualified expert such as a conveyancing solicitor should take care off.
  • A conveyancing solicitor will make sure the contracts aren’t working against you, and make sure your protected during the purchase process without any problems.
  • A developer may want you to use their solicitor but don’t feel pressured to, it is not an obligation and you can choose your own.

Step 5 – Secure your mortgage

  • You have your mortgage in principle but now you need to make it a formal offer of finance. Your mortgage company will arrange for a surveyor to survey the property for valuation purposes before they will release any funds.

Step 6 – Pay the deposit

  • Generally the deposit is 10% of the purchase price which you will pay to your solicitor who will then transfer it to the developer’s solicitor on your behalf.
  • Some developers are registered with a warranty provider such as premier guarantee which means your deposit will be protected up to a maximum of 10% of the purchase price. This protects you if the developer goes bust or you need to withdraw from the purchase due to unreasonable delays in the construction process.

Step 7 – Exchange contracts

  • You have 28 days to exchange contracts, in this time your solicitor will check; the terms, the draft transfer/lease, the title to the property, the planning documents, and any other relevant documentation.
  • They will then clarify any of the information with the developer’s solicitor and then ask you to sign the paperwork.

Step 8 – Make a snagging list

  • Once you have the keys to your new home walk around it and make a list of any issues you feel haven’t been completed to a satisfactory standard, such as defects with fixtures and fittings.
  • The best time to make this list is between exchange and completion, this gives the developer chance to fix any issues in that time, and they then can’t argue it’s due to wear and tear from you moving in.
  • Warranty repairs – developers have a duty to repair all defects within the first 2 years of you buying your home, after that you get another 8 years for damage to certain parts of the property. Just remember after the first 2 years your not covered for wear and tear, or damage caused by you not having the appropriate maintenance work carried out.
  • If you move out before the 10 years warranty is over the entitlement is then passed to the new owner.

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Michelle Gaffaney
Michelle Gaffaney - Architectural Director
With a wealth of experience working on a range of projects, Michelle Gaffaney has a passion for design and strong relationships with her clients. Connect with Michelle on LinkedIn