Top tips for buying a new build home

The benefits of buying a new build home

New build homes are appealing to home buyers for a number of reasons:

• Many people like the fact that they will be the first to live in the property.
• Repairs and redecoration costs should be minimal for the first few years.
• Buyers can often select fixtures and fittings to tailor the property interior to their taste.
• New properties usually come with guarantees. As well as NHBC’s 10-year warranty, other companies provide warranties and insurance for new homes, such as Local Authority Building Control (LABC) and Premier Guarantee.
• If the property is built to the correct standard, homeowners can enjoy lower running costs and energy bills.

You can read our guide to find out more about the pros and cons of buying a new build home.

Top tips to avoid problems when buying a new build home

But what about the downsides of buying a new build home? Here are some common pitfalls and top tips for side stepping them…

Developer customer service

Whether you’re buying a toaster or a new home, the transaction and after sales care can vary. Trouble is, of course, you’d expect a better level of service when you’re spending hundreds of thousands on your home. Sadly, developers don’t compete on quality and after sales service. So, when you are looking at buying a new build home, it’s down to you to do your research. Here are our top tips:

• Get to know the developers in the area where you want to buy and research them online. Look out for where they are mentioned in local forums and see what people are saying. Don’t let it put you off completely but use this information to ask the right questions.
• Get talking. If the development has been partially completed, ask the neighbours how they found the process of buying their new build home. You might pick up some top tips for negotiating and things to watch for in your contract.
• Visit the developer’s other sites. How do they look? Do the new residents speak highly of their homes and the developer?
• Never rely solely on the developer’s promotional material. Get a feel for what you’re buying by visiting the site and the local area. Look at transport links, do your journey to work, walk to local facilities and so on.
• Don’t be pressured into using the developer’s conveyancing solicitor. It’s not uncommon for the developers’ solicitor and sales team to exert huge pressure on you to complete, even where there are clear conveyancing problems. If you have a good, independent conveyancing solicitor, they are less likely to bend under pressure from the developer and act in your interests.

For more information see our guide on how to choose the best new home builder.

New build premium pricing

Just like a new car, a new build house or flat will depreciate in price the minute you turn the key in the door. Even in a rising property market, you may not get your money back when you buy a new build home if you have to sell within a year or two. Here are out top tips for tackling this:

• 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. Compare it with the resale market so you understand the extent of the premium you will be paying.
• Negotiate with the developers. Find out what other properties on the site have been sold for on Zoopla, Rightmove or at the Land Registry. There can often be deals to be done at the end of their financial year, or when there are only a few properties left to be sold.
• Shop around for good deals. Many developers offer incentives to differentiate them from other local developers: free furnishings, 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% impact how much your mortgage provider will lend.
• Plan to stay put for a few years. Future proof your purchase by ensuring it fits with your personal plans for the next few years. Could your new partner move in? Could you comfortably fit a new baby in?
• Think about adding value. When buying a new build home, think about whether there is scope to add value. Can you add a conservatory, a landscaped garden or loft conversion? You may not be able to afford it now, but it may be an option in the future and make your home more attractive to future buyers.

Delays in the process of buying a new build home

Delays are common, particularly if you are buying “off-plan” — before the development has been completed. We recommend you get the builder to agree a ‘long stop’ completion date which means they’ll be liable to pay you compensation if they don’t finish the work by that date. Check out our guide ‘buying off-plan’ for more advice.

For more information on the legal process of buying your new build home, and things to watch for at every stage, check out our guide Buying a new build – the conveyancing process explained.

Getting a mortgage on a new build home

If you are not a cash buyer and are getting a mortgage to buy your new build home, delays can also be a problem when it comes to your mortgage. Take a look at advice on getting a mortgage for your new build home. There are developer mortgage schemes to help make it more affordable to buy a new build home. See our guides on Deposit Unlock and the Own New Rate Reducer scheme.

New build workmanship and finish

NHBC warranties and other new home warranties are not going to cover workmanship and quality finishes. So, make sure you’re happy at every stage of the build with how your new home is shaping up and especially before you complete.

By the time you instruct solicitors you should have seen copies of the plans and specification of what the developer intends to build. The more detail this shows, the better.

In fact, properly prepared plans and specifications will tell you exactly what you are getting. These should include design, measurements, the type and quality of materials and decorative finishes. Anything less, and the developer has scope to reduce the specification and build you something of lower quality than you might otherwise expect.

If you’re buying a new build home ‘off-plan’, don’t rely solely on the developer’s promotional material and a visit to the show home.  These are not the same as a proper specification and mean that you are dependent on trust to get what you want.

Whether you’re about to complete on a new build home or have moved in to find problems, get an independent on-site snagging inspector today to fix your problems.

Leasehold vs Freehold

Whether your new build home is freehold or leasehold is fundamental. Leasehold means that you have a lease from the freeholder to use the home for a number of years. The leases for new build are usually long term. Often 90 years or 120 years and as high as 999 years.

There are often certain conditions attached to a leasehold property. Restrictions can include obtaining your freeholder’s consent for alterations to the property, sub-letting and owning pets. Some can be reasonable and sensible especially if you are buying a flat.  Leaseholders are responsible for paying for maintenance and buildings insurance, and usually also have to pay an annual ground rent, as well as fees to the freeholder, such as when you remortgage or wish to do building works.

If you are buying a new build flat, you will have no choice but to buy it on a leasehold basis. You need to ask the developer and your conveyancing solicitor to walk you through the terms of the lease, what restrictions are included and what charges apply now and in future years.

New build houses should not be sold as leasehold. Our campaigning in this area led to the Government committing to ban the selling of new houses on a leasehold basis and for ground rents on all new leasehold properties to be set to zero. This proposal has not yet come into law. There is more work to reduce the cost of leasehold extensions.

Watch out for new build warranties

Warranty insurance

NHBC and similar new home warranties are supposed to give peace of mind for the first 10 years after construction of the property. The policy attaches to the property, so that it benefits successive owners during the 10 year period. You should be aware that the NHBC is an insurer. The guarantees are, in reality, insurance policies with an excess to pay. If you make a claim, NHBC may use the small print to avoid paying for or carrying out remedial work.

Snagging

Make sure there is a “snagging” provision in your contract to allow you to get little issues sorted directly with the developer. During the first two years from completion of your home, NHBC will step in if you make a claim against the developer and the developer fails to carry out the remedial work. See how to fix problems with your new build.

Two year – initial period

We would urge you to diarise the two year developer time limit. If you want to make a claim under the initial guarantee, you must notify the developer (in writing and copied to NHBC) before it expires. Even though you make your claim to the developer, NHBC have a free dispute resolution service.

Warranties on white goods

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.