An Easy Guide to Navigating the New Build Property Market
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Buying a house is a milestone achievement, and rightly so – it’s likely the largest investment you’ll make in your lifetime. If you’re considering purchasing a new-build home, it’s important to be aware of the many steps involved and factors that can influence your ability to successful procure the property.
Investing in new build properties can offer several important advantages and opportunities, which are not only beneficial for individual homebuyers but also for real estate investors. To help you out, we’ve come up with our own guide to help you during the process of buying a new build home.
The New Build Property Market
A “New Build Property” refers to a residential or commercial property that has been recently constructed and has not been previously occupied or used. This term is typically used to distinguish these properties from “resale” properties, which have been previously lived in or used.
New build properties can encompass a variety of types, including individual houses, apartment buildings, commercial structures, and more. These properties can be sold at various stages of the construction process, including:
- “Off-plan,” where the property is sold based on architectural drawings and plans before the construction work has started or while it’s underway.
- “Newly completed,” where the construction work has recently finished, and the property is ready for its first occupants.
It’s also worth noting that new build properties are often built as part of larger development projects, where multiple properties are constructed within a defined area, often by the same developer.
A quality homebuilder will include additional shared amenities like parks, schools, shopping centers, or transportation links.
However, standalone new builds, often referred to as “self-builds,” are also common, where a single property is constructed on a plot of land purchased by the individual homeowner or investor.
A Guide to Buying a New Build Property
- Assess your current financial situation
- Initial research and deciding on property type
- Research the housing market and exercise due diligence
- Reserving or purchasing the property
- Conducting Snagging surveys before moving in
1. Assess Your Current Financial Situation
Before you start house hunting, it’s important to know what you can actually afford. To determine your budget, evaluate your savings, income, and any debts that are withstanding.
It’s also a good idea to consult with a mortgage provider to find out how much you’re likely able to borrow and what the associated interest rates will be. Remember to account for additional costs such as closing costs, moving expenses, and potential home upgrades.
Moving forward, this will give you an idea as to what price range you can afford.
2. Initial Research and Deciding Property Type
Embarking on the journey to purchase a new build property requires a great deal of initial research and decision-making, especially when it comes to deciding on the type of property that best suits your needs.
The first step is to clearly define what you’re looking for in a property. Consider factors such as the size, number of bedrooms and bathrooms, layout, outdoor space, and other features that are important to you. This will largely depend on your lifestyle, family size, work situation, and personal preferences.
Based on your needs and budget, decide on the type of property you want to invest in. This could be a detached house, semi-detached house, townhouse, condo, or apartment. Each comes with its own pros and cons, maintenance responsibilities, and fees.
3. Research the Housing Market and Exercise Due Diligence
The next step is to have a look at what existing or upcoming developments are available in your area of choice. Take into account important factors such as proximity to transport services, amenities, schools, etc.
You should also see if there are any additional costs associated with buying the property, like legal fees, stamp duty, or customization charges. Some developments will cover these for you but this is not always the case and can add additional strain to your budget.
Explore various developers and property types to gain a sufficient understanding of the property market. Check online reviews of each developer to assess their credibility and reliability. If homeowners have experienced problems that weren’t sorted, it’s good to know so you can avoid the same happening to you further down the line.
If possible, visit show homes or the construction site. This will give you a tangible sense of the property’s quality, layout, size, and aesthetic.
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4. Reserving or Purchasing the Property
Before putting an offer on a new build property, it’s useful to obtain a mortgage agreement in principle. This will demonstrate your intention to buy and can improve your chances of securing the new build property you’ve had your eye on.
Visit the property or construction site before exchanging or signing anything. Ask to inspect the show home if the property is still being built and take note of the finishes, materials used, and build quality. Also, enquire about any future planned developments that could potentially affect your investment.
Once you think you’ve found the perfect home, it’s time to lock it in so others aren’t able to take it from you. This means signing contracts and being legally bound to see the transaction through.
Thoroughly review and understand the terms and conditions set out by the contract, including payment schedules, completion dates, and specifications.
You’ll need a legal representative to handle the legal aspects of buying a home, known as conveyancing. They’ll check the contract from the developer, negotiate terms if necessary, conduct necessary searches, and provide legal advice throughout the process.
If you aren’t sure what some of the terms mean, always consult with legal professionals and get advice regarding your rights and obligations.
Once your solicitor is satisfied with the contract and your mortgage offer is in place, you can exchange contracts with the developer. You’ll typically need to pay a deposit at this stage, usually 10% of the purchase price. After contracts are exchanged, the agreement to buy the property is legally binding.
5. Conducting Snagging Surveys Before Moving In
A snagging survey is a thorough inspection of a new build property that identifies any faults or defects that need fixing. It’s a good idea to get a snagging survey done before completion, or as soon as possible afterward, to identify any issues that the developer needs to address.
Ideally, the snagging survey should be conducted between the property’s construction completion and your legal completion date (the day you get the keys). However, if this isn’t possible, try to arrange for the survey as soon as possible after moving in. Many builders offer a warranty period during which they’ll fix defects that are reported, usually within two years of completion.
6. Understanding Service Charges or Ground Rent
When buying a new build property, especially flats or apartments within a development, there are additional costs to consider beyond the purchase price. These include service charges and ground rent, which are often applicable to leasehold properties. Here’s what you need to know about each:
Service Charges: Service charges are fees that leaseholders pay to cover their share of the cost of maintaining and running the building and shared areas. These costs can include building insurance, maintenance (like cleaning common areas, gardening, and lighting), repairs, and management fees.
Service charges are usually paid annually, but the payment schedule can vary depending on the lease agreement. Leaseholders have a right to request a summary of how the service charge is spent, and they can challenge service charges they believe are unreasonable at a tribunal.
Ground Rent: Ground rent is a fee that a leaseholder pays to the freeholder or the landowner. It’s essentially a rent for the land the property is built on.
Ground rent is typically a small amount, but the exact figure and how often it needs to be paid should be specified in the lease. In some cases, ground rents can increase over time, so it’s important to check the terms of the lease carefully.
Leaseholders should be wary of leases with ground rents that double every few years, as these can quickly become unmanageable. The UK government is working on reforms to address this issue.
7. Aftercare and Any Issues After Moving In
Once you’ve fully moved into your property, you may find small issues that require fixing. This is why you must maintain open communication with your developer throughout the whole process.
Review what aftercare services are provided by the developer, including maintenance agreements, warranties, and dispute resolution processes. A new home warranty is a policy that covers the cost of repairing various structural defects of a new property.
It is typically issued by the builder or a warranty provider and is designed to protect you from potential issues that might arise in a newly built property.
A new home warranty generally covers structural defects that may occur within a specific timeframe, typically around 10 years from when the property was completed. This can include faults in the walls, roofs, and foundations, among others.
Many new home warranties offer more comprehensive cover for the first two years. During this period, the builder is usually responsible for fixing any issues that might arise, which can include non-structural defects, such as issues with the plumbing or electrical systems, as well as issues with the fixtures and fittings.
If you discover a defect, you should notify your builder or warranty provider as soon as possible, following the claims process outlined in your policy. By establishing good relationships, you improve your chances of problems being addressed promptly.
The new build property market continues to play a critical role in addressing housing demand across many regions, especially in urban and developing areas.
Investing in a new build property can be an exciting venture, and for many people, there’s nothing quite like the prospect of moving into a brand-new home that’s been designed to modern standards.
It’s important, as with any property purchase, to do your homework and understand what you’re buying. Engage a good solicitor, thoroughly review any documents, inspect the property carefully, and ask plenty of questions.
If you’re diligent and thorough, investing in a new build property can be an excellent decision.
Disclosure: Some of the links above are affiliate links, meaning that at no additional cost to you, I will receive a very small commission if you click through and make a purchase. These links help to pay the editorial costs of writing a blog. For more information, please read my full affiliate disclosure here.
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