Many people dream of purchasing a sparkling new-build home, free from any trace of the lives of previous occupants. Buying a new-build means that nothing has been touched by anyone except builders and it can be designed and finished to your specification.
There are many advantages to buying a new-build home; for example, there are a number of Government incentives such as Help to Buy Equity Loans and the Starter Home scheme to help first time buyers get on to the property ladder. Developers may also offer sweeteners to close the deal including paying your stamp duty or legal fees.
Other benefits include getting to choose your own fixtures and fittings and no holdups due to an upward chain.
However, problems can and do occur with new-build property purchases, so savvy home-buyers should make sure they cover off the following five factors to ensure that they are signing up to a dream, not a debacle:
Understand that you may find it harder to get a mortgage
Despite the economic recovery being well underway, lenders are still nervous about lending on new homes. When the economy crashed, many new-builds were discovered to be grossly over-valued, which left many lenders drastically out of pocket. It was reported that two-bedroom flats in Kingston Quay, Glasgow, one of the smart dockside developments that were supposed to help regenerate Britain’s older industrial cities, were bought for £215,000 in September 2005. Of the few that did later sell in mid-2008, one went for £79,000 and another sold for £86,000.
You therefore may find you are restricted to borrowing 85% of the value of a new house, or 75% on a flat, whereas with an older property the lender may be willing to loan a bigger percentage.
You should also be aware that most mortgage offers are only valid for six months; therefore, if construction of the new-build gets delayed and your lender refuses to extend your mortgage offer, you may find yourself having to apply for a loan all over again with no guarantee of obtaining the same terms.
Watch this space!
When considering a new-build as a potential ‘forever home’ for you and your family, remember your hoover! One of the most common complaints of those who have invested in new-build homes is the subsequent lack of space and there being nowhere to store their everyday items such as an ironing board or a vacuum cleaner. Or even their bed! A lady suffering from buyer’s remorse told the BBC in an interview that the, “largest ‘double bedroom’ is just 3.4m (11ft 2in) by 2.5m (8ft 2in), with barely enough room for a double bed.”
“It has a fitted wardrobe and I can just about squeeze in in a little chest of drawers,” she added. “But there’s no room for even a little chair to hang my clothes on overnight.”
New-build show-homes often contain furniture that is scaled down in size to create the illusion of more space. Doors are often omitted from show homes as they take up room, and mirrors and lighting are used create the illusion of brightness and space.
You must also be aware that show-homes are nearly always fitted out to a higher specification than the actual homes for sale. For example, using granite worktops to give that superior luxury look – but this is often only available as an optional extra.
As with any product, the seller (in this case the developer) have a right to present their offering in the most attractive way possible as long as they do not stray into the realm of misleading the consumer. Therefore, it is up to the buyer to see past the shiny surfaces and cosy furniture, and properly evaluate whether they can live with their purchase long-term.
The new-build is not completed on time
The builder has a duty to provide you with reliable and realistic information about when your new-build will be finished and the date you can move in. As mentioned above, this may affect your pre-approved finance.
If an unreasonable delay occurs, you can walk away from the purchase and have your reservation fee refunded.
Snagging issues
Doors that don’t close properly, lights not working, roughly finished worktops; snagging issues such as these can be a problem with any new-build, no matter how careful and competent the builder is.
Fortunately, one of the major advantages of buying a new-build home is that it will be under a 10-year warranty. You should also secure a two-year developer’s warranty for fixtures and fittings which most reputable developers will offer as a matter of course.
Prior to moving in, it is advisable to invest in a snagging survey. This will outline different types of defects, from low water pressure to dodgy fixtures. Rest assured, despite the horror stories printed to sell newspapers, the majority of snags tend to be cosmetic and are quickly remedied.
The nation-wide, industry-led Consumer Code for Home Builders, states that all builders must have a procedure in place for dealing with home buyers’ complaints. The Code is aimed at empowering purchasers so they are aware of their rights before, during and after they buy a new-build home. It covers home buyers who purchase a new or newly converted home constructed by a home builder registered on or after 1st April 2010 and is insured by one of the following home warranty bodies:
- National House Building Council (NHBC)
- Premier Guarantee
- LABC Warranty
The after-sales service of the Code applies to anyone who purchases the new-build within two years of its completion.
Invest in proper legal advice
An experienced property solicitor will ensure that you have the protection of all the warranties and guarantees available when purchasing a new home. But they will go further than that. For example, new housing developments are often built on ‘brownfield land’. This is second-hand land previously occupied by another permanent building, such as a factory. Although property developers and local authorities must ensure land is safe for residential building, there is no guarantee that issues won’t arise.
A recent report from home insurer London Victoria revealed that more than 1 in 10 new homes built on brownfield sites have suffered problems such as flooding, contamination, poor drainage and sewage problems as a result of the land they are built on. An expert conveyancer knows to include provisions in the contract that offer protection to the purchaser should problems relating to previous use of the land arise.
In summary
Purchasing a newly built home can be a dream come true, provided you take certain steps to ensure your interests are protected.
Saracens Solicitors is a multi-service law firm based in London’s West End. We have dedicated and highly experienced property law solicitors who can assist you with all aspects of buying and/or selling a residential property. For more information, please call our office on 020 3588 3500.
Heard about our ‘no completion, no fee’ service? We understand the importance of getting the sale or purchase of your home tied up by Christmas. That is why we are offering a ‘no completion, no fee’ arrangement during November and December 2016. To find out more, please call our office today.