Like the smell of a new car rolling off the forecourt, there’s something special about being the first person to live in a property.
But for all the benefits that come with buying a new-build property, there are also things to watch out for, too.
Buying a new-build home can be as stressful as purchasing an older property, so knowing what to expect is key.
In this guide, we’ll reveal everything you need to know about buying a new home and explore some of the key questions you might have before doing so…
What is a new-build property?
New-build properties are homes that are newly constructed and have never been lived in before.
Once a property has been lived in by someone, it can’t technically be described as a ‘new-build’.
Do new-build properties hold their value?
While new-build homes can experience early depreciation, over time they can grow in value just like any other property.
Some new-build homes sell at a premium simply because they are new, so selling within the first few years of owning one can mean that they hold their value less well than more established homes.
But new-builds in in-demand areas, with good transport links, schools and amenities are likely to remain desirable for the long-term, meaning they should rise in value in the right market conditions.
Do I need a survey on a new-build property?
It’s not a legal requirement to have a survey on any property – new-build or otherwise.
However, while surveys are largely recommended for peace of mind when buying an older home, the builder warranties that come with new-builds mean they’re often not required.
The most important ‘survey’ to undertake on any new-build is snagging and it can be worth having a professional snagging report carried out to verify that everything is as it should be.
Are new-builds exempt from property tax?
Stamp duty applies to new-build homes, just as it would for any other property purchase in England.
Investors sometimes offer incentives to buyers like covering all or some of their stamp duty costs, so always ask when you come to make an offer on a new-build.
Can you haggle with a new-build?
You can negotiate on price when buying a new-build property just as you would when buying an older home.
New-build properties can sometimes decrease in value in the early years after buying one, so ensuring you pay a price that works for you can help negate this.
If you feel a new-build is overpriced, make the developer an offer.
They can refuse this, of course, but sometimes, even if you can’t win the day on price, you can convince them to add things into the deal, like show home furnishings or covering your legal fees or stamp duty.
As with anything, if you don’t ask, you don’t get.
Having a sound knowledge of the local property market conditions when you come to make an offer can also pay dividends.
Find out how many homes have been sold at the development you’re looking at and what prices those properties sold for.
Is the market slow?
Is the developer struggling to attract buyers?
Knowing all this information can put you in a great position to negotiate a bargain.
Council tax on new-build properties
Council tax bands, which determine how much you pay your local authority, are calculated based on a property’s value on April 1, 1991.
For a new-build, of course, this isn’t possible, so the Valuation Office Agency calculates bands for new homes.
As soon as you move into your new property, you’ll need to inform your local council so they can instruct the Valuation Office Agency.
Banding a new-build can take time, so you can request a provisional banding that enables you to start paying council tax right away.
If the banding from the Valuation Office Agency is different to your provisional banding, the council will adjust your costs for the rest of the year, so you won’t pay more than you should.
Do you need an EPC for new-build properties?
When you move into a new-build home, your builder or developer should issue you with an Energy Performance Certificate (EPC).
This is valid for 10 years and you’ll need to supply it to a buyer if you decide to sell within that timeframe.
Once that initial 10-year period is up, you’ll need to have a new EPC assessment carried out if you wish to sell, or rent out, your property.
Are new-build homes freehold or leasehold?
New-build flats or apartments are likely to be sold on a leasehold basis.
This means you’ll own the flat or apartment you buy, but not the land it’s built on.
Leasehold properties usually incur a ground rent and service charge which is paid to the freeholder to maintain the common areas of the building and the land around it.
While some new-build leasehold houses have been sold in recent years, this process has now been banned by the government, so ensure that any new-build house you look to buy is being sold on a freehold basis.
New-build Shared Ownership properties and Help to Buy
The Help to Buy scheme has enabled thousands of buyers to take a step on the property ladder, either through an equity loan or through Shared Ownership.
Properties sold under the Help to Buy equity loan scheme are always new-builds.
Homes bought under Shared Ownership, however, can be new-build or an existing property owned through Shared Ownership.
For more information on Help to Buy, check out our full guide.
Getting a mortgage for a new-build
New-build mortgages can sometimes be more difficult to secure.
Lenders can see mortgages for new-build homes as riskier, due to the potential for depreciation in the early years after buying one.
If a new-build’s value drops, the lender has less security on their loan, meaning they may put maximum loan to value stipulations in place.
This could mean you need a larger deposit to buy a new-build and bring your loan to value down.
Five tips for buying a new-build property
1. Do your research on developers
When spending a large amount of money on a new-build home, it’s important to do due diligence on the developer you’re buying from.
Look online to see the kind of properties they’ve built in the past and to find out what previous buyers think of the quality of their homes and their after-sales service.
Visit their sites and undertake viewings to check out the quality of their builds – even if you’re not looking to buy at that particular site.
2. Factor in potential delays
Delays can be an issue when buying a new-build home before it’s built.
The biggest problem caused by any delay to the construction of your new home is often related to your mortgage.
Because mortgage offers are usually valid for six months, any build delay can sometimes mean you have to re-apply.
When agreeing to buy a new-build, insist the developer honours a ‘long stop’ completion date.
This sets in stone a target date for completion of your property and should your developer miss it, they would be liable to pay you compensation.
3. Be thorough with snagging
It’s important you’re happy with everything when your new-build home is complete and ready for you to move in.
Your developer should allow you a period of time to ‘snag’ your new home – meaning anything you’re not happy with is rectified by the builder for no extra charge.
When snagging your new property, take a detailed, forensic look at everything:
• Look for defects on woodwork, paintwork, windows and tiling
• Check for cracks in walls and ceilings and poor plastering
• Check all surfaces like kitchen counters are level
• Check all doors and windows are fitted correctly and open and close as they should
• Turn on all taps and showers to check water pressure and temperature
• Turn all lights on and off
• Check power is running to all plug sockets
• Examine all flooring and carpets for defects or poor fitting
• Check for badly pointed brick work
• Look for slipped roof tiles or damaged downpipes and guttering
You could also consider a professional snagging survey if you’re not confident doing this yourself.
4. Futureproof your property
Because new-builds can sometimes depreciate in value in the first few years after buying one, it’s important to purchase a home that works for you in the medium to long-term.
Think of eventualities like a potential new partner or children coming along before you buy – would the home you’re looking at be suitable?
5. Add some value
The best way to increase the value of any property is often by adding square footage.
When looking at new-build properties to buy, think about the scope to do this – perhaps with a kitchen extension, conservatory or loft conversion in the future.
Should I buy a new-build property?
There’s a lot to think about when considering whether or not to purchase a new-build property.
These are the pros and cons you’ll need to consider:
Pros of new-builds
Cons of new-builds
You’ll get a 10-year NHBC builder’s warranty
Delays sometimes occur when buying off-plan
New-build homes can be high specification
You may find major issues through snagging
When buying off-plan, you may be able to select things like kitchens, flooring or finishes
New-build room sizes can sometimes be smaller than older homes
You’ll be in a smaller chain
New-build homes can take time to ‘settle’ meaning you may get cracks in walls and ceilings early on
Your developer might offer you an incentive to buy
If you’re buying on a site that’s not finished, you’ll have to put up with building work around you
If you’re a first-time buyer looking to take a step on to the property ladder, the government’s 95% mortgage guarantee scheme could help. Our guide outlines everything you need to know.
And if you’re already buying and preparing for moving day, these great tips can help ensure a stress-free house move.