Buying a new-build property that no-one has ever lived in before is an attractive option for many homebuyers. As with an older property however, there is lots to consider when buying a new-build home. Deciding to go ahead with the purchase will depend on your circumstances.
Are you thinking of buying a new-build home? Do you require advise from a financial advisor in terms of securing a mortgage? Buying your first home? Or buying a new-build through Help-To-Buy? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals who have helped thousands of homebuyers with their advice. They can search for the best mortgage deals available, while answering any questions you may have about the house-purchasing process.
Why buy a new build?
There are plenty of positives when it comes to buying a new build property. The main benefit is that the property is completely brand new. This means that you can move straight in, and won’t have to do too much to the property. Many property developers will throw in extra benefits as part of the sale, such as fitting carpets for you, covering stamp duty, and letting you choose tiling, flooring, fixtures and fittings as part of the purchase (e.g. kitchen fittings). These will be fitted as part of the building process, removing the hard work for you. When moving day comes, all you have to do is unpack and enjoy your new home. Many of the fittings in new-builds are often modern, with the latest energy-efficient, smart technology.
Another positive of new-build homes is that they offer many first-time buyers a great opportunity to get onto the property ladder through shared ownership and Help-To-Buy – schemes which are only available if you purchase a new-build property. The process of buying a new-build home is also chain-free, which means that you are not stuck in a chain with buyers above you (one of the main stresses of purchasing a home).
New-build homes also have to legally comply with building regulations, which means that they are often far more energy-efficient than older properties. Over 80% of new-builds have an energy efficiency of either A or B, making utility bills far more affordable. New-builds should also come with a warranty that covers you for certain things.
Cons of new-build homes
There can unfortunately be a few negatives to buying a new-build home. These include:
Small room sizes
Many developers squeeze a lot of properties into their developments to maximise their profits. As a consequence, the amount of space on offer in some new-builds can be compromised, meaning smaller rooms. When you go to view a new-build, check that all of your belongings and furniture will fit into the space available.
Property value
Just like buying a brand new car, a property can depreciate in value shortly after you have purchased it, and it can take several years for its value to go up again. If another new housing development is constructed near your new-build, this can affect the value of your home. If you are planning to buy a new-build, aim to stay in it for the long-term.
Leasehold contracts
Many property developers are selling homes as leasehold rather than freehold. If your contract with the developer is freehold, you own the property and the land outright. If it is leasehold, this means that you will normally have to pay ‘ground rent’ to the freeholder, and ask their permission for any works you do to the property (like renting). This can cause issues, as leasehold contracts can last for a long length of time and prevent homeowners from making changes to their property.
Quality of workmanship
You’ve seen and read about new-build issues in the newspapers – and unfortunately it’s likely that there will be some problems with the quality of the workmanship on your new-build home, as developers use cheap trades who get paid by the number of homes they can quickly complete in an hour/day etc. It’s always worth having a snagging survey taken when you purchase a new-build to determine structural problems and other snags that can be sorted out before you move in. As a result of snagging issues, the building of a new-build development doesn’t always go to plan, and you may also experience delays in terms of construction and moving in. This is something worth bearing in mind before buying a new-build. Would you have to pay extra rent to stay somewhere else while your home was being completed? What about storage costs? will this affect your mortgage offer?
Top tips before committing to a new-build
As a starting point, look for developers in the area where you are looking to buy and do your research. Check out their reviews from previous customers. Don’t be afraid to speak to other people on the development (if it is being built), on how they found the buying process with the developer. Also visit other developments by the housebuilder and see how they compare. Don’t take the developer’s promotional materials at face value – they will have been compiled by a marketing team. Visit the local area near where your new-build is being constructed. Check out transport links, local facilities, green spaces etc.
Don’t forget to look at older properties in the area – look at whether an older property would be better in terms of space on offer and value for money. Find out how much other properties in the local area are worth and use this as a negotiating tactic with the developer. This is especially useful when there are only a few properties left that the developer wants to sell. Also ask the developer about the incentives they offer. will they install carpets? Offer to pay your stamp duty? Or lay turf in your garden?
Leasehold versus freehold
Leasehold
If you are in a leasehold contract, this means that you do not own the land that your property is on. You therefore have a lease from the freeholder to use the home on that property for a set number of years. Leasehold contracts are often very restricting, and leases on new-builds are often for many years – some can be as high as 999 years. If you’re on a leasehold contract, you’ll have to speak to the freeholder about pets you own, sub-letting, building extensions and decorations/amendments you make to the property (as if you were renting). You may also have to pay an annual ground-rent charge to the freeholder. Ground rent can rise very quickly over the course of several years, and can sometimes double in a decade, causing financial complications.
Freehold
Most houses are freehold. If you have a freehold contract, you own the property and the land outright, meaning that you are responsible for its upkeep.