Buying a new build is always an exciting opportunity. Just in case buying a home is not exciting enough, buying a brand new property comes with a wholly different feel. Whether you are planning on buying your first home, a larger house or an investment property, a new build is something everyone should consider.
In the last 10 years, a total of 1.4 million new build properties have been built in the UK. In fact, 161,002 homes were registered to be built in 2019 alone. This makes 2019 the strongest year for new homes being commissioned since before the financial crash of 2007. With more and more new build homes being constructed each year, potential homeowners have plenty of options to consider./span>
If you are considering buying a new build home, you have come to the right place. The team at My First Property have put together this complete guide for buying a new build home. We will explore the pros and cons of new builds, along with how buying one is different to buying an older home.
Our first point is an obvious one, but also the first thing that comes to mind when buying a new build. To put it simply, new build homes are built to suit modern living. This includes modern aesthetic design both inside and out. Interiors are often decorated in neutral and minimalistic styles, meaning that new owners have a simple base to work from when applying further decoration.
But new build houses come with far more than just looks in mind. New builds are often fitted with modern appliances and USB plug sockets, which are used more on average than mains power sockets by younger people. As modern architecture tends to embrace simpler, more streamlined and open layouts, new build homes often reflect this as well. If you are looking for this type of feel from a new home, a new build is the obvious first choice.
Moving into a home that nobody has lived in before is the very definition of a clean slate. No dated decorations, no bodged up DIY and no risk of wear and tear. It also means that all appliances will be installed to the correct standards, meaning that everything is generally more efficient, and therefore cheaper to run. Many new homeowners are greeted with faulty boilers and wiring, which can be a drain on your finances . With a new build home, you can put this worry to bed.
Even the simple knowledge of being the first people to live in this home is a pleasure in itself. Just like the feeling of a new car, everything just feels cleaner, sleeker and open to be customised in whatever way you want. Additionally, if you are moving into a brand new home, there are no previous occupants to wait on. Unlike older homes, where new buyers have to wait until the existing occupants have found another property, you can get moving as soon as the purchase is complete!
When a new build home is bought, in many cases the house is held under construction warranty for two years. This means that if you move in and discover anything wrong with your home, you have a direct line of responsibility back to the developer. They are then bound by law to come and fix the problem. While this does vary from developer to developer, generally speaking it is their responsibility to rectify. We always recommend checking the situation with your construction company before you buy, just to avoid being blindsided with warranty.
Since your new home comes as a clean slate with minimal decoration, you have blank canvas to work with. Most will come painted in neutral colours with no wallpaper, and are therefore very easy to decorate yourself. Additionally, the layout and general aesthetic will be held to modern design standards. One good thing about modern interior design is that it is generally clutter free, so you will not have to spend too much on decor to create the modern look.
While new build homes do come with plenty of benefits for potential homeowners, there are some pitfalls to be mindful of.
Comparing homes to cars again, brand new models tend to cost more. As soon as the keys are handed over, the purchase is no longer brand new, and the value will decrease. This is the same for property. However, this is rarely an issue if you are planning on living in the property. While the worth of a new build may drop from £160K to £140K after purchase, this will likely rectify itself as the rest of the development is built and demand increases.
As is the case with the property market in general, the biggest factor in increasing prices is time. House prices go up over time, generally speaking. This means that even if the value of your property does drop when you buy it, the overall value will increase with time. This is one advantage that the property market has over purchasing a car. Cars do not retain their value, and therefore cannot be viewed as an investment. Property does, and while this works slightly differently for new builds, it should not be an issue provided you plan on keeping the property for a decent amount of time.
When purchasing a home from property developers, customer service tends to leave something to be desired. Since property developers do not compete with each other with after sales service, it can be up to you to hurry things along and get any issues resolved. This can mean that if you find issues with your property, while the developer is (usually) obliged to rectify it, they tend not to rush to do so.
In order to combat this, you should do your research into the property developers before committing to the purchase. Get to know their track record for aftercare through forums and message boards. Talk to owners of properties they have built, and get their take on the level of customer service. Some of your future neighbours may have some insight into things to watch out for, or may be able to give you a heads up ahead of time.
So, how does the process of buying a new build differ from an older home? This step by step guide will walk you through how it all works.
The first step in buying a new build home is finding one that suits your needs. Research new developments in your areas of interest to see what might be on offer. When you have a good idea on the different new developments near you, do not forget to research the construction companies behind them. Find out if there were any issues with their previous developments through forums and news outlets.
Once you have settled on a development you like, the next step is to take a look around. Go and take a tour with the developer, but we also recommend speaking to existing residents. It is possible that the sales team will have a group of residents they refer you to because of their positive opinions about the developer. However, if you want the full picture, go and speak to the others.
It is also wise to browse the surrounding area for transport links, amenities, schools and shopping facilities. Before committing to a certain development, you have to be sure that it will meet your needs, present and future. If you are planning to have children in the future, doing your research on local schools is vital. While new build homes are popular with young couples who are yet to have children, we advise taking the time to plan ahead.
Once you have settled on your ideal development, it is time to look for your ideal home. One important thing to consider is whether to buy on-plan or off-plan. Buying off-plan refers to purchasing a home that is yet to be built. This is riskier than buying an existing home, as you will be putting money into something that does not exist, and has no guarantee of looking like the design or rendition that you will be shown. In short, you are trusting the developer to deliver on their word.
However, buying off-plan has its benefits. Buying an unbuilt property allows you to have an input into some aspects of its design. Meaning that you can choose certain colours or appliances to customise the property before you even move in. Obviously, there will be limits to this, and mainly refers to cosmetic features, but it is always nice to have the option. If you do elect to buy off-plan, here are some things you should consider:
Once you have chosen a property, it is time to secure finance. If you are purchasing off-plan, this can affect the likelihood of a mortgage lender agreeing to finance the purchase. For instance, if your home is not built during the time that was agreed, the mortgage lender will often pull out of the deal, leaving you with no finance to purchase the property you have signed a contract for.
This can provide dire financial consequences, so we recommend consulting with a mortgage adviser about your circumstances. A mortgage adviser will be able to help you find a mortgage suitable for your purchase. Before you move on to actually buying the property, you should secure a mortgage in principle.
Once you have secured a mortgage in principle, the next step is to reserve the property. This is usually done by paying the developer a reservation fee. Typically ranging from £500 to £2,000 (depending on the value of the property), this fee will reserve the property in your name for 28 days.
The developer will expect to finalise the purchase within this time, and if so, the reservation fee will be deducted from the purchase price. If the completion of the buy takes longer than those 28 days, you risk losing your reservation fee and the purchase falling through completely. This is why it is so important to have your mortgage agreed before reserving.
According to the Consumer Code for Homebuilders (a legal code of conduct for property developers) buyers should receive a written agreement that specifies several things. These include:
If you do not receive a document of this type, we recommend that you ask for one, and do not finalise the reservation without the guarantee of one.
Now that everything is in order, it is time to move forward with the purchase. The first thing you should do is to appoint a conveyancing solicitor. While the property developer may encourage you to use theirs, you always have the options to go elsewhere if you choose. The conveyancing solicitor will handle the legal points of the purchase, such as:
With a qualified professional to manage all the legal nitty-gritty of the sale, you are left to secure your mortgage and pay the deposit. Since you have already agreed a mortgage in principle, it is now the time to get a formal offer of finance.
The mortgage lender will arrange a surveyor to carry out a survey that confirms the value of the new build. If your new property has not been built yet (off-plan) the valuation will be determined using the specification provided by the developer. Typically, the deposit for a new build home will be 10%. You will pay this deposit to your conveyancing solicitor, who then passes it on to the solicitor representing the developer.
The final thing to do is exchange your contracts. As mentioned earlier, you will have 28 days where the property is reserved for you to buy. Your conveyancing solicitor will manage this process for you, making sure that all relevant documents are correctly completed. The last thing to do is sign the paperwork, and the property is yours.
As we talked about before, new build homes are typically under warranty for any defects or construction that feel is inadequate. As soon as you have access to your new home, you should create a snagging list of everything you feel needs rectifying by the property developer. Lists like this typically include decoration defects or issues with fittings. Ideally, you should aim to get this snagging list created between exchange and completion of contracts. This will give your developer the time to fix the issues before you move in.
This warranty covers the property for the first 10 years, even if you move out before that time. It does not, however, cover issues caused by wear and tear or not having the correct maintenance work done on your home. In short, anything that is your fault, the warranty will not cover. If you sell the property before this warranty expires, the remaining length will pass to the next owner.
So there you have it, the complete guide to buying a new build home. Buying a new build comes with its own benefits and pitfalls, but can often be far simpler for first time buyers than a previously owned home. It simply depends on what is right for you.
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