If you are looking to move house, you may be wondering whether you should consider a new build. Obviously, a new build should have lower maintenance costs and be more energy efficient. There are pros and cons to purchasing a new build house or flat that are worth bearing in mind throughout your decision-making. It is a good idea to let your lawyer know you are considering a new build as they can advise on the process from the very beginning and what you should particularly be looking out for.
How the conveyancing process is different to existing homes
The conveyancing process is slightly different when buying a new build and sometimes more complicated with a greater chance that something could go wrong.
If you have found a new home that you like, the first step in the buying process is to make an offer. Once the offer is accepted you need to pay a non-refundable reservation fee and then you should formally instruct a solicitor to act on your behalf throughout the purchase process. You should also apply for a mortgage, if applicable, at this stage. It is normal practice for a mortgage lender to have an independent valuation of the property but note that the time to secure a mortgage is likely to be longer for a new build than an existing property.
The checks and searches that a solicitor will do for a new build property are different. The first thing the solicitor will do is check that the developer has been given proper planning permissions and that the property has access to all the right services such as roads and sewers. They will also consider whether there are any restrictive covenants in place. Your solicitor will look at, and negotiate as appropriate, any contract provided by the developer’s solicitor.
Once you have sorted out your mortgage, your solicitor will arrange to exchange contracts, it may still be months before you can move in. A deposit for an existing property is usually 10% but for a new build 30% is normally required to be paid to the developer’s solicitor at exchange. You will also be asked to sign a contract to buy the property at the agreed price once it is completed.
Some developers will not let prospective buyers view their property until it is completed. However, this runs the risk that the quality of work is not as you expected. Your solicitor can ensure that snagging provisions are written into your contract, which means that any problems are reported to the builder for fixing before you move in.
Finally, when the construction work is completed, a date is fixed for handover, and you are given the keys to your new home.
Potential traps
There are always unexpected hiccups in any purchase. However, we highlight four important traps to be aware of when buying a new build property:
- Developers often encourage potential buyers to use their solicitor by saying it is more efficient and will ensure a smooth process. This is a trap and means you may find yourself under pressure to complete while conveyancing problems remain. It is always better to use your own solicitor, especially if they are used to doing new build conveyancing, as they will act in your interests.
- Delays are frequent with new build properties, particularly if you are buying “off-plan”, so be careful about giving notice on your current rented property or fixing a moving out/completion date, unless you are happy to couch-surf or move in with family for a few months.
- You should be clear about whether the property purchase is freehold or leasehold. Some long-term leases are for 999 years, and the developer may tell you it makes little difference to owning the property freehold. However, if the property is leasehold, it is likely that there are restrictions concerning alterations, sub-letting or even owning pets. You will also need to pay an annual ground rent, and this may increase each year. There are also likely to be fees for re-mortgaging or doing building work.
- A new property may come with carpets and white goods included. However, some developers may try and sell you additional items at inflated prices.
Top tips and considerations
Below are some tips and considerations for buying a new build:
- Do your homework on the developer and make sure you ask them plenty of questions before signing the paperwork. Visit other sites they have worked on and see if you like them.
- Talk to any neighbours. They may be able to give some pointers for what to include in the contract or what they wished they had asked before moving in.
- The price on the brochure or billboard is only an asking price and it is quite legitimate to try and negotiate on the price advertised. Whether or not you are successful may depend on whether you are one of the first or last buyers of the development. If the developer won’t move on the price, it can be worth asking them to cover your stamp duty.
- Building regulations mean new build properties need to be as energy efficient as possible.
- New build properties tend to be more expensive than similar older properties.
- Fixtures and fittings are often included in the cost of a new build property.
Conclusion
Buying a new home is an exciting time. If it is a new build, the process can be slightly different and longer than traditional home purchasing. It makes sense to know what to expect and to get the right legal advice.
If you or someone you know wants more information or needs help or advice, please contact us on 020 7481 8888 or email [email protected].