Buying a new build home will be a very appealing option to many buyers, and they can offer some fantastic benefits. However, there are also some important points to consider when buying a new build home as opposed to an older property.
Benefits of New Build Homes
New build homes are popular with some buyers for a number of reasons.
1. No DIY to do
The buyer can move straight into a property that doesn't need any work doing to it other than cosmetic work for example to lay carpets or flooring, install curtains and blinds, hooks and bathroom accessories. For prospective homeowners already juggling a hectic schedule this is likely to be a very appealing prospect.
Depending on how far along the build was when the sale was agreed, the buyer may also be able to make decisions on some of the finer details. This might include choosing the kitchen and bathroom fittings, which flooring to install (if they want this to be done at additional costs through the builder) and the location of sockets.
2. Low running costs
Another benefit is that new build homes need to comply with strict building regulations which demand a high level of energy efficiency. As a result, high spec insulation and double glazing often means that it'll cost less to heat a new build home.
3. Warranties and guarantees
New build homes will usually come with warranties and guarantees. The National House Building Council (NHBC) offer a 10 year structural warranty on most new build homes in the UK. Many developers will also offer additional warranties on fixtures and fittings, boilers and other services and there will usually be a "snagging" provision included too which means that minor issues can be quickly sorted.
4. Help to Buy
If you are eligible for the Government's Help to Buy scheme, then this could help you to purchase your new build home. For more information, see How Does a Help to Buy Equity Loan Work?
What to Consider when Buying a New Build Home
All of the benefits mentioned above do inevitably come with a price tag. New build homes are often priced at a premium so there is a risk that you might not make your money back if you have to sell up within the first couple of years. That said, you may be able to negotiate price with the developers, or convince them to throw in extras, such as a higher spec finish or free Conveyancing through their Conveyancing partner. It's worth negotiating to get the best deal.
If you have agreed to buy a home that is not yet built, known as 'off plan' or unfinished, then there is always the risk of completion being delayed. While there is the benefit of having no onward chain of transactions, the developers could run into unexpected delays which can, in turn, mean that your home isn't ready for you to move into by the planned date.
It's important to be prepared for this eventuality to ensure you're not left without a roof over your head! There's also the risk of your mortgage offer expiring if the build gets delayed, so keep on top of this and keep extending it as necessary.
3. Know what you're buying
It's also important to make sure that you know exactly what you're buying. If you have agreed to buy a home before it's built then it's likely that you will have made this decision based on the show home or a show him in another location.
To avoid any nasty surprises, make sure that you know whether the finish of your home will match that of the show home and clarify exactly what is and isn't included in the purchase price. Arrange to visit the property you are buying regularly while the build is progressing so that if things aren't shaping up as you'd expected then you can flag this up early on.
4. Contract Exchange Deadline
When buying a new build home you could find yourself with a limited timeframe in which to exchange contracts. Different developers will have different deadlines for contract exchange, but commonly this is as little as 4 weeks after you've agreed to buy the property.
If you miss the contract exchange deadline then you could lose your reservation fee and you might lose out on incentives or the property all together. To mitigate this risk, make sure that you are organised, with your mortgage application ready as soon as you've paid the reservation fee. Also make sure to get all your paperwork completed and returned to your Conveyancer as quickly as possible and respond to queries promptly.
5. Leasehold properties and ground rent clauses
In 2017 it was widely reported that a number of housing developers were charging unfair ground rent to homeowners. New build homes were being sold as leasehold, with clauses written into the contracts that would see ground rent escalate exponentially over the course of a few decades.
The Government is now taking action to put a stop to this practice. In December 2017 developers were banned from selling new build houses as leasehold and the Government is currently working on further proposals to protect home buyers from unfair ground rent charges.
This means that if you are buying a new build home directly from the developer then you will not be affected by this issue. However, if you are buying a home "second hand" which is a couple of years old then this is something to be aware of.
For more information, see Leasehold Properties with Ground Rent Clauses Explained.