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Buying a new build house? | Your guide to purchasing new build property
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Buyers are increasingly choosing to opt for new build properties. Energy efficient, chain-free, low running costs and high specifications can make new homes seem perfect. However, as with buying any property, there are pros and cons which every buyer needs to consider. This guide aims to help you negotiate through the differences involved in buying a new build property versus an existing dwelling.
Modern building regulations dictate that house-builders meet certain standards regarding the energy efficiency of homes, making them more environmentally sound and also saving the homeowner money on bills. These features include things such as:
- High quality insulation throughout
- Energy-efficient systems
- Double glazing
Being brand new and with no occupier, there is no onward chain to worry about.
Generous incentives are often put together by the builders which can make buying a new build particularly attractive. Such incentives might include all or a proportion of the deposit paid for by the developers, or your stamp duty paid on your behalf. You may also get free items, such as dishwashers, refrigerators, carpets and curtains.
A new-build home is essentially a blank canvas and although the basics will be in place and some neutral decoration will have been undertaken, you will usually have the option to fit out the property to your own taste. Most new build properties come with the latest fixtures and fittings to attract a purchase. Don’t forget all new homes will have the benefit of a builders guarantee which usually lasts for a period of 10 years and covers any issues or problems resulting from the build. This is usually provided by either the National House Building Council or Zurich.
The latest building regulations require that adequate security and safety features are built into the specifications of the property. These will most likely include highly secure external doors, smoke and burglar alarms.
If your property is not built or part built completion will not be on a fixed date but will be on notice because the developer cannot guarantee when the property will be finished. This means there will be a clause in your contract which states that completion is to take place within a given period, usually 7 or 14 days after the notice has been issued. This date then becomes the contractual completion date.
Although there is no onward chain your purchase will be governed by the builder’s construction timetable and because your contract is on notice they are not obliged to meet your own deadlines. Builders often need to secure sales of additional plots before they have sufficient funds to complete the build on plots already sold and therefore the predicted completion date could be pushed back.
Frequently you will buy a new build property without seeing the finished product. You may find new homes are smaller and more tightly packed together than expected as some developers may try to fit as many properties as possible onto a piece of land and the finishes may not be as expected.
Once your new build property is structurally finished you must ensure you have the opportunity to “Snag”. The term 'snagging' is the process of detailing any minor errors, items for repair or defects in the property that will need to be fixed by the builder. Before you hand over the final payment, make sure you conduct a thorough inspection of the property to identify those problems that need fixing. These might include doors not opening and closing properly, fixtures not being installed correctly, faulty water pressure and so on. You can conduct the inspection yourself as long as you know what to look for, but it may be advisable to hire a professional snagging company. You need to compile a comprehensive list of corrections that need to be addressed before you complete.
Completion of a new build purchase may take place many months after contracts are exchanged. As a mortgage offer will typically be valid for a maximum of 6 months, perhaps less, this creates the risk that the product on offer or the entire offer will be withdrawn prior to completion. Failing to complete under these circumstances not only means you lose your deposit but you also will be liable to the developer for any losses he suffers as a result. If possible ask for a “longstop date” to be entered into the contract. This is a date by which if completion has not taken place you are entitled to withdraw without penalty. The date should be prior to the expiry date of your mortgage offer.
When looking for a new-build house, it is important to check that any builders you come across are members of the National House-Building Council (NHBC). Members of the NHBC must maintain the building standards and rules set by the Council and should give you confidence that the property is built to a high quality. The NHBC will inspect the property to check that standards are being maintained during construction. All builders that are members of the National House-Building Council (NHBC) will provide a ten year warranty and insurance policy on the property to safeguard you against any major problems with the building and to give you peace of mind.
Buying off-plan means purchasing a new build property before it has even been built and can be advantageous to both you the purchaser and the developer. This practice provides a developer with revenue and a purchaser with (usually) a hefty reduction – as much as 20%. Furthermore, you may have the opportunity to personalise your property by choosing kitchen and bathroom tiles, appliances, flooring and other items. This is also the time when the best plots and highest discounts are available.
However, there are disadvantages. Buying off-plan means your property may not turn out as expected. Make sure that you are aware of the plot location, the size, scale and dimensions of the property and everything that will be included in the price. If possible try to view a property of the same design, possibly on one of the developers other sites, to make sure you are happy with the actual layout of the property detailed in the plans.
When making an offer you may be required to pay a reservation fee in order to reserve a plot for a reservation period, usually 28 days. The reservation fee will be deducted from the purchase price if you proceed to completion, but it is usually non-refundable if you do not proceed. Because of this it is important to ensure you have a property lawyer instructed and mortgage agreed in principle before reserving a property.
It is often advisable to instruct a solicitor that has experience of purchasing new-build properties. The construction of a new property requires planning permission and it is your conveyancer’s job to check that the appropriate permission has been obtained and the property has been built in accordance with it. Where the property is part of a new estate the permission will relate to the estate as a whole rather than individual plots and it might be necessary to check that the development as a whole is to be built in accordance with the permission. They will also have the experience to ensure that the appropriate agreements are in place relating to the adoption of the roads and sewers, the access rights and routes for other services, negotiate with about delaying completion or agreeing retentions until problems or snags are sorted out by the builder. In-Deed's conveyancing lawyers are all experienced with dealing with New Build properties. Call 0330 100 2322 or email email@example.com to find out more.
Most developments will include a show home which is usually located on a very nice plot and finished to the highest specification. Show homes can be useful guides; however, it is worth remembering that developers spend a fortune on making the show home look as good as possible.
Here are some their most common tricks:
All the lights will be on to create the impression of natural light.
They may use smaller furniture than normal to create the impression of a bigger space.
Doors will be removed to create a ‘natural’ flow.
Glass furniture and mirrors will provide a feeling of space.
Bedrooms will contain a bed and small bedside table – a lot less furniture than you will have.
Fittings will be expensive and not included in the specification you are buying.
Gardens will be professionally landscaped and may not be included in your specification.
If you are prepared to wait for the development to be completed you could negotiate great terms on the purchase of the show home which may even include the contents.
The following bullet points are various tips on what to do and look out for when purchasing a new build property.
Check that the builders are members of the National House-Building Council (NHBC). Members of the NHBC must maintain the building standards and rules set by the Council and should give you confidence that the property is built to a high quality. The NHBC will inspect the property to check that standards are being maintained during construction.
Check how the site is managed – this can be a clear indication of how the development company operates and how efficient they are. A disorganised and poorly or inadequately managed site may reflect the attitude of the builder. Also check to see if they have won any awards.
Search the Internet for information and feedback on your builder. Visit other completed sites to see the standards applied, find out if the builder has won any industry awards. If you know anyone who has already bought on the site ask if they are happy with the quality of the product.
Check the house has a warranty from Zurich Municipal, the NHBC or Premier – these companies all provide a 10 year warranty. And although this mainly covers major structural repairs it is also a measure of how reputable the development company is.
Check whether there is an affordable housing provision on the site – although this is unlikely to change your decision, your developer may try and hide this information from you. On many new developments the builder will be required to provide a percentage of the homes to housing associations as “affordable housing”.
Measure your property including ceiling height to make sure your furniture fits - show homes often have smaller furniture than usual to make rooms feel bigger and to improve flow. Obviously your own property will have no furniture and therefore rooms may appear bigger.
Check the site and house plans carefully – and remember marketing material may use artist impressions and should not be regarded as accurate.
You are not buying the show home – in fact you may not even be buying the same style of house. If possible get a tour of the style of property you are buying even if it means visiting another development.
Make sure you negotiate – a developer is unlikely to reduce the price, however other incentives may be offered particularly if you are a cash buyer or a first time buyer with a mortgage already approved in principle.
Extra care needs to be taken at the end of the developer’s financial year – this is the time of year developers cut corners to meet targets, however, this is also the time the most generous incentives are offered.
Instruct a property lawyer early – by instructing a solicitor early means you have someone available to help negotiate terms and clauses in your contract such as longstop dates etc. Preferably choose someone with experience of dealing with new builds.
Consider getting your house professionally inspected by an independent snagging company – ideally before completion so your developer has time to address the snags and defects identified.
If you have an NHBC warranty re-inspect your house every six-months during the first two years – Your developer is obliged to fix any defects and if they don’t the NHBC will. Be warned, faults caused by normal shrinkage and drying out are not covered by this warranty.
Don’t skimp on your insurance – make sure your home and contents policy includes legal protection which will be useful if you have to take your developers to court.