Whether you’re a first-time buyer or looking for your next home, a new build property could be a great option for you.
But as with any property purchase, there are various pros and cons to consider when buying a new property.
Our guide outlines everything you need to know about buying a new build, answers some key questions and clears up some common misconceptions along the way...
Should I buy a new build?
With any property purchase, you should always do your research to ensure you're making a sound decision.
That's certainly the case with new builds.
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, just like an older property can sometimes throw up a nasty (and costly) surprise once you’ve completed.
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.
The pros and cons of buying a new build
New build pros
New build cons
Often less spacious than older homes
Backed by Help to Buy
New technology and appliances
Legal work can be complicated
Build quality and snagging issues
Homes come with warranties such as NHBC certificates
Development management charges can apply
Seven top tips for buying a new build home
1. Always negotiate a new-build house price
Like a 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 if you decide to sell your home within the first two or three years of ownership, you might struggle to meet the price you originally paid.
Just because a new-build property is new, it doesn't mean the asking price is non-negotiable.
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.
2. Be on top of the market
When considering a lower offer for a new build, it pays to know how much clout and bargaining power you have before doing so.
Research the development if it's new to you and find out how many other homes have been sold and for what price.
If few homes have been sold because the market is slow, you should certainly consider a lower offer.
Also 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.
3. Think long term
New build property purchases work best from an investment perspective if you’re going to live there, or rent out the property, for a long time.
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?
4. 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 aftercare as well as build quality.
5. Factor in potential build delays
If you buy a new-build property off-plan (i.e before it’s built), 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 protected should a delay occur.
That means asking the developer to agree to a 'long stop' completion date.
If your home is not completed by that date, the developer will be liable to pay you compensation for the delay.
6. Getting a mortgage for a new build
While getting a mortgage for a new-build property shouldn't be a problem, 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.
7. Snagging on your new build
When you buy a new build home, you can check the property for defects or poor finishes prior to completing your purchase.
This is known as ‘snagging’.
Snagging is a hugely important phase of the buying process and is a real opportunity for you to correct anything you're not happy with:
- 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?
Is Help to Buy only for new builds?
If you want to apply for a Help to Buy equity loan, you can only buy a new build property.
Help to Buy is also only available for first-time buyers.
Through Help to Buy, you’re lent 20% of a new-build property’s value by the scheme, with a 75% mortgage and 5% deposit covering the rest of the purchase price.
Help to Buy equity loans are interest-free for the first five years and the loan can be paid down at any time.
However, if your property grows in value, you could end up paying back more as the loan is based on how much your home is worth at the time.
Do you pay stamp duty on a new build?
Stamp duty applies to new build homes, just as it does any other property.
How much you pay in stamp duty will depend on the purchase price of your new build, and whether you’re a first-time buyer, existing homeowner, or landlord.
Are new builds over-priced?
New build homes can carry a price premium because buyers will become the first owner or a new, immaculate home that’s energy efficient and kitted out with modern appliances.
However, it’s possible to negotiate on price, while many developers will incentivise buyers through covering other costs like legal fees or stamp duty.
Is buying a new-build a good investment?
New build homes not only provide buyers with low maintenance living from day one, but they can also be a great long-term investment, too.
However, new build values can depreciate in the short term, simply because they are no longer ‘new’.
So, if you’re only planning to stay in your property for a short period time, a new build may not be right for you as an investment.
Much of your new-build’s success from an investment point of view will come down to your purchase price – so always negotiate.
How to find a new build home
If you’re looking to buy a new build to live in or rent out, or you’re looking for land to build a new home, we can help through our nationwide developer links.
Start your search here.