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Considering buying a new build home? We look at how the process works and what to watch out for.
There are lots of benefits of buying a new build home. You’ll be the first person to live in the house, it will be freshly decorated, have brand new appliances, and likely to be highly energy efficient which means lower energy bills too.
But buying a new build home does come with certain risks, especially if you’re buying off-plan before the build has even started. You’ll want to know you’re getting value for money, you may have problems getting a mortgage, there are often delays moving in, and when you do move in, 95% of new homes report ‘snagging’ issues’. So you need to be fully informed before taking the plunge. Here are the essential tips to know at every stage:
There are some important steps you should take before making an offer or reserving a new build home:
When you’re buying a new build home it’s vital that you do your research:
Find more in our guide on Best new home developers: Choosing the right home for you.
Do your mortgage research before you start house-hunting so that you know your budget. This is especially the case if you’re buying a new build home because the process of getting a mortgage can be a bit more complicated.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Once you’ve chosen your preferred mortgage, it’s time to get your ‘mortgage in principle’. This is an indication that a lender could lend you a specified amount, based on details you’ve provided about your income, spending and debts.
You should be able to get a mortgage in principle for free. With our partners at L&C, you can get a personalised Decision in Principle in just a matter of minutes. And unlike some other lenders, getting a Decision in Principle from L&C won’t impact your credit score. There’s no obligation to proceed with the deal they find you, but it gives you a good indication of how much you can borrow.
Getting a mortgage in principle is important because most developers will want to see proof you can proceed before accepting your offer. But another reason to get your mortgage in principle in place is that once you put down your reservation fee on a house you’ll often only have 28 days to exchange. So you’ll want to do as much prep beforehand as you can.
If you’re buying a new build home it’s worth investigating schemes that aim to make it more affordable. These include:
The legal side of buying a new build home is more complex than the standard conveyancing process when buying. That’s because the potential for something to go wrong is much higher with a new build purchase – issues like non-compliance with planning regulations, incomplete agreements for roads and sewers, failure to plan for the future maintenance of common parts of a development and so on, which can cost you dearly if not properly investigated.
It’s not uncommon for the developers’ solicitor and sales team to want you to use their partner solicitor. But make sure you shop around for your own independent conveyancing solicitor who can fight your corner and is less likely to bend under pressure from the developer. If you are feeling pressured, read our guide on Do I have to use my developer’s solicitor? for what to do.
Also understand the legal steps to buying a new build: check out our guide Buying a new build – the conveyancing process explained.
Get instant quotes from regulated and reviewed conveyancing solicitors that cover your area. Our customers save on average £490.
If you are buying a new build flat, you’ll almost certainly be buying a leasehold. You need to ask your conveyancing solicitor to walk you through the terms of the lease, what restrictions are included and what leasehold charges apply now and in future years.
Our campaigning in this area led to the Government committing to ban the selling of new houses on a leasehold basis. But flats continue to be sold as leasehold.
Also, from June 2022, ground rents on newly-created leases in England and Wales were reduced to zero. So if you’re buying a new build home with a lease that was created after this date you won’t need to pay ground rent. Retirement properties came under the new scope in April 2023.
The Leasehold and Freehold Reform Act 2024 is now law – but it hasn’t yet come into force. Read more about the expected changes and timeline for implementation in our guide on Leasehold reform.
However, whether your property is freehold or leasehold you may need to pay additional fees. A new model of new build estate management fees, known as ‘fleecehold’, has crept in over the last 20 years and is now the industry norm. Owners of at least a million newly built homes face paying these estate charges and permission fees with no way to challenge them or to take over the management themselves.
So before buying a new build home, ask your conveyancer to find out if there will be any new build estate management fees to pay. Find out more in our guide on Problems with New build estate management fees.
Haggle with the developers before buying a new build home. Find out what other properties on the site have been sold for on Zoopla, Rightmove and the Land Registry. There can often be deals to be done at the end of the developers financial year, or when there are only a few properties left to be sold.
You’ll usually pay a new build premium but it’s good to understand how much extra you’ll be paying for getting a brand new home. Compare the new build home you are looking at with similar “old” properties in terms of value, space and rental value in the local area. Check the price per square foot.
Many developers offer incentives to people buying a new build home, from free furnishings, specification upgrades, a car parking space, or by paying your legal fees or stamp duty. If you can’t negotiate money off the price, the offer to pay your stamp duty is likely to save you the most money. Be aware that incentives offered by the developer over about 5% of the value of the property may impact how much your mortgage provider will lend. So speak to your mortgage broker about any incentives agreed as early as possible.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
A building or structural warranty is essentially an insurance policy for newly built homes, the most common is the National House-Building Council (NHBC)’s Buildmark Warranty. But there are others, and you won’t get to choose as it’s down the the developer which one they sign up to. It’s almost impossible to sell a home without one as all mortgage lenders require a 10 year structural warranty. The type of warranty typically covers you for defects that arise due to faults in the design, workmanship or materials that remain undiscovered at the time of practical completion on your new build.
Nearly all warranty providers require developers to sign up to a consumer code, which is there to protect consumers during the sales process and offer a dispute resolution service when things go wrong during the first two years. You can read more about these consumer codes and their limitations in our guide to the New Homes Ombudsman and Consumer codes.
In the initial 2 years after buying a house, if you discover problems, you’ll need to speak to the developer first. See our guide on how to fix problems with your new build.
Here’s our CEO Paula Higgins talking to the BBC about new build warranties and what to look for when buying a new build home.
Before paying a reservation fee, you should have seen copies of the plans and specification which will tell you exactly what you are getting. These should include design, measurements, the type and quality of materials and decorative finishes. It’s tedious but worth getting right and in writing.
Anything less, and the developer has scope to reduce the specification and build you something of lower quality than you might otherwise expect. Copy in your conveyancer to ensure everything you ask for is written into your contract.
When buying a new build home, you’ll usually have to pay a new build reservation fee. These often range from £500 to £2,000 and should be deducted from the purchase price. But check whether it’s refundable or not and the length of the cooling-off period.
Look for details in the reservation agreement including:
Paid your reservation fee? It’s full speed ahead to make your purchase stay on track. Here’s what you need to do next.
When buying a new build home, once your offer has been accepted and you’ve paid the reservation fee, go back to your mortgage broker and apply for your chosen mortgage. If you haven’t started looking yet, you need to do this ASAP. Speaking to a new build specialist mortgage broker will speed this process up.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
You’ll also need to go back to your conveyancer and set them to work on the legal side of your purchase. There are a number of searches relating to new build properties which must be undertaken before purchase as part of the new build conveyancing process. Some examples of these searches include:
If you’re buying a new build home from a developer signed up to the New Homes Quality Code, you’ll have the right to have a professional pre-completion snagging inspection of your home on your behalf. We urge you to do this and it’s also a good idea to get a snagging survey after you move into your new build home to identify any snags as soon as possible.
The cost of pre-completion inspections and snagging surveys start at approximately £300 and can be a worthwhile investment to ensure not only that your home is finished to the highest standard but that it is structurally sound and compliant with building regulations.
A snagging survey is there to spot problems with your new build home. We can connect you with an independent on-site snagging inspector today.
When you buy a house you need to get buildings insurance in place from exchange if you’re buying with a mortgage. When buying a new build house it can be tricky to arrange insurance, a common problem is that the postcode isn’t on the insurer’s system yet. You can contact Royal Mail to have the address added to their database and then you should be able to compare home insurance quotes. Don’t forget, you’ll need contents insurance when you move in too. Read more in our guide on New build home insurance.
Get an instant quote for home insurance, buildings or contents insurance from 50+ insurance providers. Compare and save on your insurance today.
Buyers are usually asked to pay a deposit of between 10-30% of the total price of a new build upon exchange. You’ll also be asked to sign a contract agreeing to buy the property at the current advertised price and to pay off the balance at completion. New build warranties such as NHBC or Premier Guarantee will normally protect a full deposit against builder insolvency although in some cases it will only cover the first 10%. Find out more in our guide New build conveyancing explained.
When you’re buying a new build home off-plan, you cannot set an exact completion date when you exchange contracts. Instead, you agree to ‘completion on notice’. Then, once the property is complete, the developer will serve notice on the buyer to complete, typically within 10 working days.
Once you’ve moved into your new build home there are still some important things to do:
Whether you opt for a pre-completion inspection or not, it’s a good idea to have a snagging survey done once you have moved in. You can also create a snagging list yourself but you are unlikely to spot the range of things a professional snagging inspector will identify. An independent snagging survey will also add weight to your complaints if you have found your developer to be unresponsive to your calls for action. You can even get a re-inspection to ensure the work has been completed by the developer to the correct standard. Read more about the different snagging surveys and costs.
A snagging survey is there to spot problems with your new build home. We can connect you with an independent on-site snagging inspector today.
When it comes to your white goods – such as cookers, dishwashers, fridge freezers, hobs, washing machines and dryers – you have specified in your new home, ask the developer to hand over guarantees to you on completion. You’ll want to have this stipulated in the contract. See our guide on moving into a new build home for more detail on what should be provided on completion.
Buying off-plan means you purchase your home before the developer has finished building it. You may even agree to buy it before construction has begun. One benefit of buying a new build home off-plan is that you often get a say in the design and build. Find out more in our guide Buying off-plan
Stamp duty applies to new build homes in the same way it applies to any other type of property. Find out how much stamp duty you’ll need to pay (if any) with our handy stamp duty calculator.
New build homes can lose value in the short term because they’re no longer ‘new’. So if you need to sell a year or so after buying your house, you may find you don’t get what you paid for it. If you’re buying a new build home, ideally plan to live there for a number of years.
When you’re buying a new build home your developer will typically require between 10% and 30% of your property’s purchase price as a deposit when you exchange contracts. You’ll pay the balance when you complete.
This will depend on your property. In many cases, developers add restrictive covenants to their developments, meaning you may need their permission to extend the property within a set number of years. Read more in our guide Restrictive covenants: What they mean.
When buying a new build home, you’ll usually need to pay a new build reservation fee to the developer to secure the plot. New build reservation fees typically range from £500 to £2,000 and should be taken off the purchase price when you complete. Before paying, check whether the new build reservation fee is refundable or not and how long the cooling-off period is.
If you’re buying a new build home through a scheme like Deposit Unlock you’ll need a 5% deposit. Otherwise, the deposit you need when buying a new build home will depend on your lender. The deposit required is usually higher for new build properties, with new build flats usually needing a higher deposit than a new build house. If you’re buying a new build home it’s a good idea to speak to a New Build specialist mortgage broker like L&C, who can access specialist new build mortgage products and advise on Government and private schemes.
A new build property is a house or flat that has not yet been lived in. When you’re buying a new build home, you may agree to buy before construction has even started.
There are a number of benefits of buying a new build home including:
you’ll be the first to live in the property, repairs and redecoration costs should be minimal for the first few years, new properties usually come with guarantees and if the property is built to the correct standard, homeowners can enjoy lower running costs and energy bills.
However, disadvantages of buying a new build home include:
Lack of space: Some developers pack a lot of properties onto a site in order to maximise their profits. This can mean a new-build home is less spacious than an older property.
Quality and Snags: Even with the best new build home, you can still expect snags like doors getting stuck on new carpets or a loose tile. Whether it’s a significant structural issue or a series of small annoying snags, be prepared to have a snagging survey as soon as the developer will let you on site.
Delays: New builds don’t always run to plan and it isn’t unusual for the move-in date on a new build property to be delayed. This could just be an inconvenience, but if it goes on it can cause added stress and add to your costs when buying a new build home.
You can read our guide to find out more about the pros and cons of buying a new build home.
There’s a lot to consider before buying a new build retirement property. For example, service charges can be extremely expensive, you may need to pay hefty exit fees when you sell or sublet – and some leases have restrictions like banning subletting and even preventing you from selling for less than the open market value. So do your research. Read our guides on The hidden costs of retirement villages and Retirement villages compared.
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