For a lot of people, the best thing about a new build is being the first person to make it a home. Most of the time, the buying process is simpler, too.
That said, it’s not always smooth sailing. So, here are the pros, a few cons, and a simple guide for what to expect when you decide to buy a new build property.
The benefits of buying a new build property
There are a lot of advantages to buying a new build home compared to buying a period, or “old build”. These include:
You’re not in a chain
When you buy a home that’s not new build, you’re often dependent on other people buying and selling before you can exchange contacts. These “chains” can go through huge delays. At best, this can be stressful. At worst, you can lose your mortgage offer or the sale can fall apart. But if you’re buying a new build from the developer, the most you have to worry about is a delay in selling your current home (if you’re not a first-time buyer).
You might have some say in the design of your home
There are two ways of buying a new build home:
- You buy a finished home
- You buy “off-plan”, which means the builders haven’t finished yet.
If you buy off-plan, you’ll look at architectural drawings, artists’ impressions, and lists of options. While this means you won't see the views and natural light before you move in, it can be nice to have a say in your kitchen fittings, bathroom tiles, and carpets.
You don’t have to renovate
Because building codes keep new builds as energy efficient as possible, your home is almost always going to be pretty cheap to run. You won't need to update things before you can live in your house or lower your bills. And even if the magnolia paint the developer picked isn't quite to your taste, you won't have to live with the previous owner's choice of wallpaper either.
Your developer might offer you incentives
Whether that’s help in selling your existing home, throwing in some landscaping services or kitchen appliances, or even paying your stamp duty, some developers like to sweeten the deal.
The house comes with a warranty
Around 90% of housing developers in the UK are registered with the National House Builders Council. One of the upsides for the buyer is that the homes sold by NHBC registered developers are under a 10-year warranty. This usually means:
- The developer will cover an initial “snagging” period, where they’ll fix small issues as they come up – think a door that’s catching on the carpet, a tile that’s cracked, or a nailhead that’s popped out of the plasterboard.
- The first two years in your new home are covered completely. If something breaks or breaks down and it wasn’t your fault, the developer has to fix it.
- Then for another eight years, some parts of the house are still covered.
What are the drawbacks of buying a brand new home?
Let’s be completely honest: while new build homes in the developer’s marketing materials always look amazing, there are some disadvantages too.
The property lacks personality
Period homes have period features – high ceilings, large rooms, ceiling roses round the light fittings, original fireplaces, stained glass in the doors... They might also have established gardens with mature trees to give you privacy and shelter. New build houses don’t, and it can be quite a lot of work and investment to put this “personality” into your home.
New builds are expensive and often lose value
Just like when you buy a car, a new build property will usually lose some value as soon as it’s no longer brand new. They also come with what’s often called a “new build premium” – a slight price inflation from the developer who knows how much people want to be the first to call a home their own.
There can be teething problems
Even though you’re hopefully moving to your new build with the view to living there for a long time, it’s still worth considering the initial problems you might face:
First off, snagging.
All new builds need a certain degree of snagging. You can either pay for a professional snagging survey or make your own list during your first months in the property.
Then, there’s the building site.
If you’re one of the first people to move into a new development, you might find yourself living at the bottom of a building site. It’s worth asking the developer how much longer they plan to be working in the area after you move in.
There’s also the infrastructure to consider.
If you move to an existing property, someone else will have already set up the utilities. With a new build, you might be the first to have them installed, and the process can take a little longer. In some cases, even getting your post delivered is tricky because your address hasn’t been registered yet.
So, those are the pros and cons. Next, let’s take a look at the process of buying a brand new home and what you can expect at every stage.
Buying a new build: the three stages
1. Before you buy a new build home
The first stage of the process is generally about doing your research on:
The developer: new builds are often built by big developers who operate all over the country. This means it’s easy to ask people who already live on their estates about their experiences, read about the quality of the buildings online, and even visit the streets to see how the houses are weathering.
Local property prices: when you make what is probably the biggest purchase of your life, you want to know that it’s going to hold its value.
Financial support: both the government Help to Buy and Shared Ownership schemes are popular. They exist to make it easier to get on the property ladder by reducing the size of the deposit that buyers need to save.
With Help To Buy, you pay at least a 5% deposit on a new build home, the government adds between 5% and 20%, and then you pay back your loan as the equity builds up in your home (in other words, as you pay off your mortgage).
With Shared Ownership, you buy part of the property (usually between 25% and 75%) and pay rent on the part that you don't own.
In both cases, you have an extra bill every month, but having access to a larger deposit at the start could get you a mortgage deal with lower monthly repayments and a lower interest rate to make it more affordable overall.
2. During the buying process
The process for buying a new build is similar to any other property.
Once you’ve found a place where you can imagine yourself living, it’s a good idea to apply for a mortgage in principle to show the developer that you’re a serious buyer.
You can get a mortgage in principle for free from Habito.
You'll then pay a reservation fee (usually between £500 and £2,000) to the developer to hold the property for you. This is typically valid for about four weeks, during which time your mortgage application will be processed, and your conveyancer will take care of the legal side of the purchase.
We’ve got much more on the mortgage application process here: How to Get a Mortgage
Your lender will also want to know two dates if you’re buying a new build:
- The short stop date, when the developer expects your home to be ready.
- The long stop date, by which they have to be finished, or else you’ll be entitled to compensation.
The danger with buying a new build is that you might lose your mortgage offer if the developer encounters problems and goes over the long stop date. The good news? There are specialist new build mortgages available that take this into account and give you extra flexibility.
Once your application has been approved, and your conveyancer has finished their legal checks and transferred your deposit to the developer’s solicitor, you'll sign and exchange contracts, and the house will be yours.
3. After buying a new build
Once you’ve bought your new build and you have the keys in your hand, moving in is pretty simple. You’ll still have to pay Stamp Duty and the legal fees that you owe to the conveyancer, and of course, you’ll have to decide on the best place to put your furniture. The only additional tasks you wouldn’t have to tackle for a period property are snagging and making sure that your new address is recognised and registered.
Habito can guide you through the process of buying a new build. Whether you need a mortgage in principle, tips from a mortgage advisor, or a mortgage broker to help you find the best deals for first-time buyers, find out how we can make home-buying easier today.
