How to negotiate new build house price 2024
You’ve seen the show home, researched the developer and are ready to make an offer. But it's vital you don't overpay for your new home. Read on for tips on how to negotiate a new build house price in 2024.
If you plan to buy a brand new home this year it’s vital that you know how to negotitate a new build house price in 2024.
House builders face a more challenging year ahead than they’ve seen in many years amid higher mortgage rates and the cost of living crisis. In November 2022, Taylor Wimpey said it was selling almost half as many houses each week as it was at the start of the year. Although it still expected to turn a profit of £922 million for 2022. The same month, rival builder Persimmon said its weekly sales rate per development scheme, which has been a fairly steady 0.75 in recent years, has slumped to 0.48.
While in October, Barratt Development reported new build home reservations had dropped by a third in the previous few weeks and that it expected to see a fall in annual profits.
However, it’s important to put this into the context of how much house prices increased in 2022. ONS figures for October 2022 show an annual increase in the average price of new builds of 22.7%. This took the average price of a new build to £388,140. While existing properties saw an annual increase in price of 11.9%, taking the average figure to £287,452. This gives a ‘new build premium’ of around 35%.
So what does this all mean for how to negotiate a new build house price? With builders selling fewer properties it means there’s a good opportunity to negotiate; new build developers will be as open to negotiation as any other home seller. But how do you go about it? Here’s how to negotiate a new build house price.
How much can you negotiate a new build house price by?
Research last year by property tech company Unlatch showed buyers of new build homes were negotiating a typical discount of around 14% off the asking price. But don’t get hung up on averages because the amount you’ll be able to negotiate a new build house price by will depend on a number of factors. So it’s vital to do your own research first – read on to find out what to do.
Calculate the new build premium
Buying a new build is much like buying a new car – you’ll pay a premium for it being ‘brand new’. But you want to avoid paying an over-inflated price. So when it comes to how to negotiate a new build house price, the first step is to compare the price of the property to similar new build properties in the area. Check the price per square foot and compare it to the resale market as well so you understand the extent of the premium you are paying.
You can also check Land Registry for actual sold prices of similar developments in the area if you know the postcode. It typically takes 2 weeks to 2 months for sold properties to appear on this site. For more advice on buying a new build here is a full list of the factors you need to check first.
How to negotiate a new build house price – the questions to find the answers to
If you are buying on a new build estate or bigger development, take a look at what other properties on the development are being sold for using Zoopla and Rightmove. You need to work out:
- How many properties there are in the development
- How many are still for sale on the property portals
- How long have they been marketed for
- Whether there are other developments nearby that are similar. How much are they selling for?
All of this information will give you the confidence in how to negotiate a new build house price. It may be that similar properties are selling for tens of thousands of pounds cheaper – so start with a similar discounted offer. The worst that can happen is that they say no, but at least you have a starting point.
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Timing it right can mean major savings
When it comes to how to negotiate a new build house price, timing is key. Picking the right moment could vastly increase your chances of getting a deal:
- Off-plan. House builders often need to secure financing in order to enable borrowing to pay for building the rest of the properties. So if you’re asking how to negotiate a new build house price, there are often deals to be done off-plan.
- Year end. This is the point at which house builders are under a lot of pressure to meet their sale targets. You can find out the year end – which is usually December, April or June – using Companies House.
- Last plot or two. If there are only a few properties left to sell, the house builder will be keen to get off site and move all resources to their next project. So if you’re asking how to negotiate a new build house price, you may be able to help them by taking that property off their hands at a bargain price.
How to negotiate a new build house price beyond the sale price
When you’re looking at how to negotiate a new build house price, you should focus on the price you are paying for the property. Once you’ve got this down, look at what other extras developers often use to entice buyers. Here are some of the most common:
1. Stamp duty
For example, some developers will offer to pay your stamp duty for you. This is probably the best freebie as it will save you the most money. But remember, if you are a first-time buyer in England or Northern Ireland you don’t have to pay any stamp duty on properties priced at up to £425,000. And if your new home is worth £425,001 to £625,000 you’ll pay 5% stamp duty, but only on the value above £425,000. So before you agree to this, work out how much stamp duty you would pay on the property to check you are getting a good deal. Find out more about stamp duty and how much it is likely to cost.
2. Fixtures, fittings and white goods
And when you’re looking at how to negotiate a new build house price, you could also negotiate a higher quality finish with higher quality kitchen units and flooring. Ask for these early on in the process and try to get as much as possible included when you haggle – and then agreed in writing in your specification and contract. If you are buying a property that has yet to be built make sure you read our guide to buying off-plan.
Offer match?
Also bear in mind many developers offer incentives. So take a look around a number of estates where you want to buy to see what is on offer. It could be a car parking space or an annual travel card. If your dream home is on a development without the offer and presents a significant financial saving for you, say you’ve seen it on a nearby development and ask them to match the offer. This is a good time to also compare the quality of the different developments and choose the best builder.
Are freebies really worth it?
But when it comes to how to negotiate a new build house price, don’t get fooled into taking a freebie that you didn’t want in the first place. For example, having furnishings thrown in only works if you like what’s on offer and you couldn’t buy it cheaper yourself.
Just be aware that any incentives offered over about 5% of the value of the property could impact how much your bank or building society will lend you. Any incentives to buy a property, whether they are financial or not, have to be declared to mortgage lenders. If there are loads it could affect the valuation the mortgage lender gives the property. That could, in turn, affect how much you can borrow.
Get it in writing
If you are successful and negotiate a reduced price, stamp duty payment, or optional extras thrown in, then well done! Now make sure that you get everything that has been agreed in writing. When you appoint a solicitor explain to them what you negotiated and show them the written evidence so they can make sure it is written into the contract.
Get the right legal advice
Before agreeing to have the house builder contribute to or pay your legal fees, make sure this doesn’t come with strings attached. Often the house builder will have an arrangement with a legal firm. But you should not feel obliged to use them. Shop around for the best legal firm. A good place to start is our our guide to new build conveyancing.
Get instant quotes from regulated and reviewed conveyancing solicitors that cover your area.
Frequently Asked Questions
Do developers accept offers?
Yes of course. It’s worth doing your research, bearing in mind some of the things we say in this guide, and then pitching a lower offer. There’s nothing to lose in doing so.
Do you pay solicitors fees on a new build?
Yes. You’ll definitely want to pay for a solicitor or a licensed conveyancer to deal with the legal process of purchasing your new build. New build conveyancing is often more complex than buying an existing home. And while developers may offer you discounted or free conveyancing with their partner, you should always shop around to get the best deal. And don’t feel pressured by your developer to use their provider. There are ample reasons why this might be a bad idea – read our guide on “Do I have to use my developer’s solicitor?“
