A new build property is classed as a home that has never been lived in or previously owned. A new build can be purchased at any stage of life, from first time buyers to the last time buyer at retirement level.
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Why buy a new build?
There are many advantages of buying a new build property:
A new build property can be the first home someone ever owns and is a great way to get a foot on the property ladder.
A retirement apartment, for those that are downsizing or wanting to start a new chapter in their life, provides retirees with independent living in purpose-built surroundings. New build retirement communities provide bespoke accommodation with a built-in social life, no maintenance and reduced outgoings.
Prestige of being the first to live there
New builds provide a ‘blank canvas’ and the ideal opportunity for homeowners to put their own ‘stamp’ on a property. If buying ‘off plan’ (ie; before the property is even built) developers will often work with purchasers to personalise their home and offer choices of bespoke fixtures and fittings. Some developers will offer financial incentives, such as paying stamp duty, or include carpets, white goods and furniture in the sale.
Greater chance of lower bills
Energy Performance Certificates (EPC’s) show 80% of new homes are normally A or B ratings and have higher insulation levels, retaining heat better in the winter so you are less likely to reach for thermostat on cold days.
New builds meet all current building regulations so you can be assured the property has thermally efficient windows, doors and complies with all safety policies.
If you are buying your first home from a developer, you’ll have the advantage of not being stuck in a chain. If you are not a first time buyer and have a property to sell, many developers offer a part-exchange service.
Most developers will offer a warranty on the property, therefore giving peace of mind, should any issues arise.
Potential pitfalls of buying a new build
New builds are an attractive prospect for buyers who want the convenience of a new home, with no works or renovations to tackle that would usually come with a previously owned property. But, are there any pitfalls of buying a new-build?
You often pay more for a new build
The term 'new-build premium’ is often used for new builds as they tend to be more expensive than an older property with a similar spec. Asking prices will depend on demand in the area for the property and also how many houses are available. It pays to do your homework and look at other similar developments to make sure the asking price is not over inflated, or you run the risk of falling into negative equity should you choose to sell further down the line. Check you can get a mortgage on a new build as many lenders look less favourably on those purchasing a new build property.
Be clear on what charges will apply to your property purchase. Knowing what fees will be applied and having everything in writing will ensure no nasty surprises.
New builds often come with smaller proportioned rooms and gardens. Older properties tend to have a larger footprint, so be sure to compare what you get for your budget on all types of new and older properties in the area.Outside space can be limited in a new build development, so again, be sure to assess what your main priorities are for a new home and don’t get carried away in the glitzy show-house. Be clear on what characteristics are important to you and stick to those parameters.
Buying off plan
If you sign on the dotted line for your new build ‘off-plan’ and are one of the first to move into a development, be prepared for some temporary disruption as you will be living on a working building site until all plots are completed.
Most new builds are leaseholds, not freeholds, so you need to understand any restrictions or associated costs. Knowing the length of the lease is very important and should be at least 90-120 years, ideally 999 years on a new build. Make sure you understand what lease is on the property and visit the Government website for more information.
Buying A New Build - The Process
Buying a new build, like any property, requires organisation and there is a process to follow to ensure a smooth transaction:
New Build Mortgages
Getting a mortgage on a new build can be more difficult than on older/period properties. It’s important to get your mortgage sorted, at least with an offer in principle, before you set your heart on a new build home. If you are buying off plan, check that your mortgage offer has a longer expiry date to ensure you can complete once the development is finished. Its best to talk to your mortgage advisor to make sure your mortgage deal suits your intended plans.
Available schemes for buying new builds
There are government schemes to help first time buyers buy their first property, such as the Help to Buy schemes. These schemes offer the chance to purchase a new build home with a lower deposit, have access to Government loans, lower interest rates, and participate in shared ownership schemes.
Help To Buy
If the homeowner can raise a 5% deposit, the government will provide an equity loan of up to 20% of the property value to help fund the purchase of the new build home up to the value of £600,000.
Help To Buy - London
The scheme has different guidelines for London than elsewhere in the UK. If the homeowner can raise a 5% deposit, the government will provide an equity loan of up to 40% of the property value up the value of £600,000.
This scheme allows you to have shared ownership of a home through a local housing association. You buy a share of your home (between 25% and 75%) and pay rent on the remaining percentage. There are restrictions on eligibility to apply for shared ownership, so visit the government website for more details.
Is part exchange available for new builds?
Yes, some house builders and developers run part-exchange (PX) schemes. This allows the purchaser to use their existing property as ‘part payment’ for their new build. Spring, as a homebuying service, works with many developers to offer a part exchange service that offers a guaranteed sale and no risk of offers falling through. Our service can work with you directly if no part ex scheme is offered and you want to sell your home without the hassle and uncertainty of the open-market.
What covenants are on new builds?
Restrictive covenants may be used on larger new build developments to stop homeowners changing the overlook look of their property. Each developer can apply their own rules and could affect your chances of extending, or even painting the outside of your property a different colour, so check the small print and ask the developer for all details.
If your new build provider does not provide a part exchange service, or you just want a hassle free and guaranteed sale, contact Spring today. Spring simply purchases your property with ease, speed and certainty, giving you the freedom to move and start the next chapter in your life.
With over 15 years experience, Spring’s homebuying service provides the ideal solution for homeowners who want to sell their property and move into a new build home or retirement property. We can purchase your home with ease, speed and certainty, so you are free to take the next step on your property journey without the hassle and stress of the open market.
After we receive your details, one of our Property Advisors will call you within 24 hours to confirm details about your home and to explain our process if you choose to proceed. For more about selling your home to Spring see How it Works.