New Homes Guide
Everything you need to know about New Homes
What is a new build?
A new build is a property that has been newly constructed by a builder or property developer. They refer to properties that have just been completed, or a home that is still “off-plan” and that will not be finished for several years
Buying off-plan
Buying off-plan is when you select a property to buy, long before it is completed and ready to occupy. You will usually get to see a ‘Marketing Suite’ that has sample versions of your new potential home. The process often includes exchanging contracts on the property first and then completing the transaction later when the building is finished. Typically, this timeframe can be up to 2 years between exchange and completion, allowing you more time to accumulate savings in order to meet the total price of your home when it is ready.
The exchange process involves putting down 10% of the property value to secure the property legally. There can then be a 1 or 2 further stage payments before the property is ready for completion, but this can vary depending on the developer or house builder.
If you only have a small deposit, buying off plan can be a great way to secure a home and allow yourself time to accumulate more savings to meet the funds needed to complete. Unless you’re buying in cash, you will still need to get a mortgage secured to make up the rest of the property value. It is typically 6 months prior to completion that you would apply for a mortgage, but it is always a good idea to know your eligibility for finance first. If you’re unsure how to figure out if you’re eligible or how much you can borrow, use our mortgage calculator tool here or speak to one of our impartial advisors here.
Pros and Cons of New build
There are advantages and disadvantages to buying new but here are some of the reasons a lot of first-time buyers choose to buy new:
No chains
It can mean a more straightforward purchasing experience, which many first-time buyers are drawn to. When you buy a new build property, you are buying directly from the developer or house builder meaning there are no chains!
A chain is when your seller needs to buy a new house before they can move out of the one you want to buy. Chains can go on for several houses and require multiple transactions to complete before you can move on yours. These can be incredibly stressful and is a major reason for many sales not going ahead due to a “breakdown” in the chain further up. Often a problem out of your control can prevent you from being able to complete your own purchase, leaving you frustrated and sometimes out of pocket if you have already paid solicitor fees.
Fewer hiccups
When buying a period property, some surprises can pop up in the buying process that may result in you pulling out of the purchase. Such things might include a survey that reveals a problem you couldn’t see on the viewings that may be too costly for you to repair. Or perhaps the property lacks a Completion Certificate for works carried out on the property previously.
These issues can result in further frustrations and again, loss of any fees you have paid so far to try and buy the property. When buying a new build, there is less room for these nasty surprises in the conveyancing process as you are often buying a brand-new home with a new contract.
With buying a new home, you are often also buying from a large company that is emotionally removed from the transaction. This can make for a smoother process than buying a period property directly from an individual in terms of agreeing the contract and things like the exchange and completion timeframes.
Less maintenance
Usually buying new means that no costly renovations or ongoing maintenance and repair costs are required. A new home allows you to have a better idea of your total cost of purchase with no guess-work on how much the refurbishment works may cost you like with a period property.
Anecdotally, it is said that over the lifetime of owning a period property, maintenance costs can amount to up to 1% of the property’s value per year. With buying new, these costs are greatly reduced and especially if the home comes with a warranty period.
A new home will often always come with a warranty on the build so always look out for guarantees like NHBC or Premier Guarantee. These are typically for 10 years and will ensure any faults are dealt with.
Low running costs
New builds are better insulated than period properties meaning they often have better energy efficiency ratings. What this means on a day to day, is that your energy bills will generally be much lower!
We advise that you always ask for the service or estate charges when buying a new home, so you are fully aware of the running costs and that you will be able to afford them. The good news is, ground rents are soon to be a thing of the past for all new homes going forward, so one less cost to worry about.
What’s the service charge?
This is the amount you need to pay to contribute to the running costs of the project that your new home is in. It pays for things like gardening, maintenance, and concierge. The amount you pay is worked out based on the size of your home and is an annual sum that is paid quarterly.
More Space
With new builds, there are national minimum space standards which developers of new dwellings are given guidance on. It sets out requirements for the gross internal floor area of new dwellings based on the number of occupants for each home, as well as floor areas and dimensions for key parts of the home, notably bedrooms, storage, and floor to ceiling height. These standards vary locally across the UK and although are not enforced, act as a good measure to ensure all new builds are built with these standards in mind.
Often larger developments of new homes will offer enhanced communal spaces, such as private gardens and playgrounds, or more amenities, like a gym or co-working space. This means you benefit from access to much more space and better amenities than you’d get from owning a standalone flat in period conversion, for example.
More Choice
When buying off-plan, before the property has been built, you may be able to select the type of property that best suits your taste and needs. For example, some developments provide a choice of layout or aspect of the property so you can select the one you like most. In some cases, you can even select which colour palate you prefer, meaning you get a home that is really personalised to you. You will get to see these when you view the Marketing Suite.
Incentives
Depending on the developer and the timing, you may be able to ask for an incentive in the way of a discount or Stamp Duty contribution. This will usually depend on where in the process the project is and whether the developer is motivated to make a sale. For example, if they are at the end of their selling cycle with only 1 or 2 homes remaining, there may be more chance to ask for something off the asking price!
Affordability
When buying a new build off-plan, you are often given flexible payment plans so that you can make small payments towards the property over the course of it being built. This leaves you with a smaller amount to pay when the property is ready to move in to.
There is also the option of applying to purchase through one of many Help to Buy schemes which are only applicable for new build homes. Click here for more information on Help to Buy.
Getting a mortgage for a new build home is also fairly straight-forward. Mortgage offers tend to be valid for six months, and so if you’re buying more than six months from completion, you will not need to arrange your mortgage before exchanging contracts, saving you from another layer of stress when buying the property.
To speak to an impartial mortgage broker about mortgage finance click here.
SUMMARY Advantages s of buying New
- No chains
- Fewer Hiccups
- Less maintenance
- Lower running costs
- More space
- More Choice
- Incentives
- Affordability
Disadvantages
Although more straightforward, buying a new build home can still be mind boggling with a lot of information to think about. If buying new is right for you, we can help guide you through the process and make for a smooth experience.
Unfortunately, there have been some issues with poor building control for new build property in the past, and some developers have not built using the correct materials to meet safety standards. The most common issue has been linked to a building’s cladding, or exterior façade. Although some previous new build projects are still causing issues for their occupants, the good news is all bad practices are now on the watchlist, with many inferior materials and methods now being banned.
In response to this historic failings, the Royal Institution of Chartered Surveyors (RICS) led a cross-industry working group to consider best practice in the reporting and valuation of tall buildings within the secured lending arena with a view to agreeing a new standardised process.
The EWS1 process was then agreed in the industry to help people buy and sell homes with the comfort that their building was built correctly.
Although now no longer relevant for new projects coming to the market today, for peace of mind, we recommend you always ask when the developer will be carrying out their EWS1 survey and to see a copy once it is completed.
We can help navigate any potential issues with buying any home, and we always equip you with the right questions to ask. Contact us here to speak to us further.
Whats an EWS1 form?
The External Wall Fire Review (EWS1 form) is an industry resolution to assess a building’s cladding fire safety. It is a way for residential building owners (above 18m in height) to prove to lenders and valuers that the external cladding has been assessed by an expert and does not pose a risk.