With the UK's demand on housing showing no signs of letting up, there’s a strong chance, wherever you live, you’ll have seen a development or two springing up.
But have you ever considered buying a new-build property?
Or have you considered it but been put off by prices or timeframes for completion?
New-builds can certainly be a good buy depending on your circumstances, while landlords could also consider them as a solid long-term investment.
Our guide outlines everything you need to know about buying a new-build property and also answers some key questions and clears up some misconceptions along the way...
New-build property guide
Advice when buying a new-build
As with buying any home you should always do your research to ensure you're making a sound decision.
That's certainly the case with new-builds.
However, often buyers get caught up in the fact that the property they are purchasing is brand new and assume everything will simply fall into place.
But even new-builds can have teething problems akin to an older property throwing up a nasty surprise after you have completed your purchase.
You should also be certain that you are buying in a location where demand for more modern properties will remain high, so when you come to sell your home, you will reap the benefits of that demand and any capital growth that comes with it.
How to negotiate a new-build house price
Like a brand new car, a new build property has the potential to decrease in price the moment you slide the key in the front door for the first time.
And that means, should you have to sell within the first two or three years of owning your home, you might struggle to meet the price you originally paid.
Here's a popular misconception, because we promised to right some of the those for you earlier in this piece...
Just because a new-build property is new, it doesn't mean the asking price is non-negotiable.
That's right, you can make an offer in the same way you would if you were buying an older property.
Of course, it's up to the developer if they wish to accept a lower offer or politely decline it.
But if you feel a new-build's asking price is excessive, you should consider pitching a lower offer.
And if you can negotiate on price, consider other areas you can benefit from - developers will often throw in furnishings, or offer to pay legal fees or stamp duty and that can result in huge savings for you as a buyer.
Be on top of the market
When considering a lower offer, it pays to know how much clout and bargaining power you have before doing so.
Research the area if it's new to you and find out how many other homes have been sold on the development and for what price.
If few homes have been sold because the market is slow, you should certainly consider a lower offer as the developer is more likely to be keen to get a sale secured.
Moreover, consider the time of year. Early spring, with the financial year ending at the end of April, is often a good time to negotiate with a developer.
Look to the long term
As we alluded to earlier, it's best to buy a new-build if you are planning to live in it (or rent it out in the case of a landlord) for the long term.
That way, you are more likely to enjoy some capital growth and make money when you sell it.
So, with that in mind, be certain that the property meets your requirements both now and in the future.
Will you be starting a family in the future? If so, is the property big enough?
And while you might not be thinking of extending the property now, would this be possible further down the line, both to add value and add space if you need it?
Research your developer
Unlike buying an older property, which has stood the test of time and the test of being lived in for many years, your new-build property is exactly that: New.
So, you should always do research into the developer building it.
This will help give you peace of mind that the build quality is good and that your property works for you as an investment as well as a home.
Look at online reviews and ratings of previous properties or developments the builder has worked on and consider things like after-care as well as build quality.
Problems with new-builds: Build delays
If you buy a new-build property off-plan, delays to building work can be an issue, particularly if you are moving out of another property.
Unfortunately delays to building work to happen and often it's through no fault of the developer.
But you should always make sure you're covered as the buyer, too.
And that means asking the developer to agree to a 'long stop' completion date - if your home is not complete by that date, the developer will be liable to pay you compensation for the delay.
Getting a mortgage
While getting a mortgage for a new-build property shouldn't be a problem in itself, sometimes issues can occur.
For example, mortgage offers are usually only valid for a set period of time, so if your new-build is not completed on time and your offer expires, you may have to go through the application and assessment process again.
Lenders, meanwhile, will sometimes be stricter on the amount of money they are willing to lend on new-builds.
This is due to any depreciation in a new-build property's value early on and is simply a case of the lender protecting itself.
'Snagging' is when you, as the buyer of a new-build, are able to check the property for defects or poor finishes prior to completing your purchase.
This is a hugely important phase of the buying process and is a real opportunity for you to correct anything you're not happy with.
Here are a host of things you should consider when snagging:
- Is the paintwork consistent, or too thin, or patchy?
- Is the plastering smooth, with crisp joints?
- Is the brickwork clean, with smooth pointing and a uniform design?
- Are all fixtures and fittings installed as they should be? Be sure to check all cupboard doors and drawers to ensure they work as they should
- Do the windows open and, most importantly, close properly and are there any scratches on the glass panes?
- Are the kitchen worktops smooth and fitted correctly? Are they level?
- Check all taps., switches and sockets. Does everything work as it should? When running taps, look out for signs of leaks.
- Are the roof tiles correctly laid and all guttering and downpipes fitted correctly?
Common questions: Is Help to Buy only for new-builds?
Under Help to Buy, launched by the government in 2013, the Equity Loan aspect of the scheme only applies to first-time buyers of new-build homes and not existing properties.
With Equity Loan, buyers are lent 20% of their property’s value by the government and only require a 5% deposit themselves, with a 75% mortgage.
The government doesn’t charge interest on the 20% loan for the first five years and charges after that climb incrementally against inflation.
When you sell, the government claims back its 20% loan at the property’s sale value, although the loan can be paid off by the buyer at any stage at its then market value.
Help to Buy, in its current guise, will no longer be offered to buyers after March 2021.
Do you pay stamp duty on a new-build?
Yes, new-build homes are no different to existing properties and buyers do have to pay stamp duty.
How much you pay will depend on your new-build property’s value.
Is buying a new-build a good investment?
There’s no question that owning a property that has never been lived in really makes it feel like ‘home’.
But if you’re looking to make money on your new-build, perhaps in terms of long-term capital growth or by adding value through additional space, you should consider carefully whether it is the right option for you.
Many new-builds are tight for space, for example gardens, where extensions can be added so putting in additional square-footage is not always possible.
Much of your new-build’s success from an investment point of view will come down to your purchase price – so always negotiate!
If you would like more information on new-build properties, get in touch with your local Martin & Co office.