Buying a new build has plenty of advantages. Your home will be a chain-free, pristine property, unused by anyone else. It will come with guarantees and you can probably choose your own kitchen and other features. Plus, you may be eligible for a government equity loan.
There are many appealing new build properties across South London redevelopment in the Streatham area, to Battersea, where new apartment buildings are emerging around Battersea Power Station. A good local estate agent can introduce you to properties that are coming onto the market.
But it’s always advisable to know the facts and understand the hidden costs of buying a new build home, before you commit to purchasing a property. To help you decide whether a new home is for you, read our complete guide to buying off-plan.
What exactly is meant by a new build property?
A new build means a home that has never been owned or lived in by anyone else – not just one that was recently built. There are plenty of newly built homes around. With pressure to solve the UK housing crisis, the government has pledged to build 300,000 new homes by the middle of the current decade.
Why should I buy a new build?
Buying a new build is a good idea if you want a low maintenance home. Newly-built properties must meet high energy efficiency standards, meaning your bills are often lower in a new build vs an old house. If you’re buying a new build as a first-time buyer you may be able to access a government Help to Buy equity loan – these are only available with new builds.
What extras come with a new build property?
Many developers will offer appliances, such as washing machines and cookers, and fixtures and fittings, such as flooring, with your new build, meaning you won’t have to budget for these. Starting out with brand new appliances is one of the benefits of buying a new build versus buying an existing home. But be wary of developers trying to upsell these items at inflated prices – ask questions and check what you are paying for.
Can I negotiate on price with a new build?
Developers will quote costs for each unit but these are asking prices, as with any other property. You can try to negotiate when buying a new build house, but how much you pay will depend on the level of demand for the properties. Some developers may be more willing to negotiate early on in the project to help their cash flow or if units remain unsold.
Are new builds overpriced?
Some new builds are more expensive than comparative older properties, as everything in the property is new with (hopefully) a high-spec finish. You should check the going rate for similar properties in the area by looking at sold prices and current listings on the property portals. View show homes armed with this information and don’t spend more than you can afford. Paying too much could mean you’ll struggle to sell the property without making a loss.
How do I buy a new build?
1. Step one – the finance
Start by working out how much you can afford by researching mortgage rates. Work out how much you can put down as a deposit, shop around for a good mortgage deal or use a broker, get an agreement in principle for your loan and check when it expires. Remember to budget for closing costs and fees as well.
2. Step two – find a property
Think about what you’re looking for in a property. As well as your budget consider the area you want to live in and what you need in terms of amenities and transport links. Find local developments, view the plans and go and look at show homes.
3. Step three – reserve your home
Make an offer on the property – remember you don’t have to offer the asking price. If it is accepted, you’ll pay a non-refundable reservation fee – usually up to £1,000 – to be deducted from the purchase price.
4. Step four – appoint a conveyancer
Get quotes, recommendations and read reviews but look for a conveyancer or solicitor with experience of new-build properties, and the necessary planning and drainage checks. A good conveyancer should also help if there are delays. If developer suggests solicitors or conveyancers, always compare them with independent recommendations.
5. Step five – your move
Be prepared to exchange contracts and pay your deposit months before you move in and for your completion date to slip. You need to arrange a snagging survey when you buy a new home, before you move in. There can be issues with new builds such as the finish quality, and a home inspection can pick these up.
Tips for buying a new build home
Research the developer
Check their reviews including local reviews and investigate any quality guarantees and codes of practice they are signed up to. Most UK developers are part of the Consumer Code for Home Builders or New Homes Quality Code.
Get the exact property specifications
Get all the details and specifications, including the materials used in the house, energy efficiency, floor plans and info on cladding. Don’t assume anything.
Check if they waive stamp duty
Many developers offer to pay your stamp duty to make the purchase more attractive, or as a compromise on dropping the price. Incentives over 5% of the purchase price may affect your mortgage lender’s offers, so check before signing.
Watch out for high management fees!
Both leasehold and freehold properties can have ground rent, service charges or management fees attached to them. The fees and charges on a newly built home can can reach hundreds or thousands of pounds, and are best avoided where possible.
Get an independent conveyancer, quickly
Get your own conveyancer in place – the process of buying a newly constructed property can move more quickly than for existing homes, so exchange can happen faster.
Look at your reservation agreement carefully
Find out exactly what’s included in the purchase and get all the details on fees – can any be waived or refunded? If you’re buying off-plan, read the materials closely as the model home may not match your unit’s specifications.
What should I know about new build mortgages?
There are a couple of things to be aware of when looking for a mortgage for a new build property – the deposit amount and the timeline. Your lender may require a bigger deposit than on an older property. Mortgage offers are generally for six months, so if your property takes longer to complete or the timetable slips you may have to make a new application – check this with your mortgage company first.
What about help to buy schemes for new builds?
The government’s Help to Buy equity loan scheme applies to first-time buyers purchasing a new build from a registered housebuilder. Through the scheme you can borrow an equity loan to cover from 5% to 20% of the purchase price. If the property is in London, you can borrow up to 40%.
Alternatively, people looking for help buying a new build home could consider shared ownership schemes which allow you to buy part of the property and pay rent on the remainder.
Can I part-exchange?
Some developers offer this option, which might work for you if you are struggling to sell your house or don’t want to buy a new build in a chain. However, you should get an independent valuation first as they may not offer you the full value of your home.
Will my new build be freehold or leasehold?
Most flats are sold as leasehold, meaning you will probably need to pay ground rent to your freeholder and a service charge for maintaining the communal areas and grounds.
After many buyers were faced with escalating ground rents, the government announced a ban on new-build houses being sold as leasehold.
New build v older property – the pros and cons
The pros of new builds:
– No chain
– Low maintenance and ready to move in
– Housebuilder guarantee
– You may be able to choose your fittings
– Save on fitting out the home and buying appliances
– Energy efficient
– Access to Help to Buy loans if a first-time buyer.
The cons of new builds:
– You may have a long wait to move in
– You may pay more than for an older property in the area
– You may be faced with snags and defects
– Room sizes are often smaller in new homes.
If you would like more advice about buying a home in South West London, new build or an older property, we’d be happy to help. Please give us a call to discuss our list of properties today.