New build homes are simply a property that has been built very recently. As you would be buying direct from the developer there are both pros and cons to these homes. Make sure you read the guide below to see if a new build is right for you.
Positives of new build homes
Latest design, technology and often customised to you
One of the biggest benefits to buying a new build is that it is previously unlived in. This means that it is a blank canvas for your style, with no “unique” styling choices from previous residents. As well as this, if you buy before the property has been built then you may be able to choose various aspects of it. These include the plot, materials used, fittings and fixtures.
In addition, new build homes are built in line with the latest rules and regulations. As a result, the quality of build should be fair good. This means that the chances are that the costs of repairs and redecoration for the first few years should be much lower than an older house. Additionally, the longer term fixed costs should be lower as new build homes are complying with the latest regulations. These costs can include energy bills and standard running costs.
Further potential benefits
A massive benefit to buying a new build is that they come with a guarantee. A 10 year guarantee from NHBC will cover structural defects. As well as this, most developers will offer an additional 2 year warranty adding peace of mind over the purchase.
In the process of buying, some developers may even offer you further incentives. These could include paying your legal fees or stamp duty. In other cases developers may offer white goods, such as fridges or washing machines, to act as further incentives.
The final advantage is that you will not be in a chain of purchasing. This means that you won’t be waiting for another person to finish buying a house before you can move in. Ultimately this can make buying and moving into a new build much quicker and easier.
Potential negatives of new build homes
The first potential negative about new builds is that if you buy your property before it is completed, there could be delays. As a result, any mortgage offer you might have could expire.
Secondly, the upfront cost of a new build is generally much more than a similar older property. This extra cost of purchasing is often called the “new build premium”. As a result, as soon as you turn the key of your new property, the price can drop significantly. The reason for this high price is because everything is brand new. A month later its second hand.
Beware, some developers may try to sell you extras and a more inflated price. Consequently, it may be cheaper to source and buy these products independently.
Further costs down the road
In addition to this, in a recent survey, 87% of new build owners reported issues with their properties. This could be due to many reasons, with most simply being built to a lower standard than expected. You can get a snagging survey done to assess these before you move in and get them fixed. Some new builds may have major faults that could instantly appear or appear over time.
Additionally, the entire infrastructure around the new build homes will be new. These include amenities such as internet, TV and heating. As these systems are new there is likely to be issues developing over time. The customer service for many developers has sometimes been called “lack luster”, and so getting all these issues fixed may be easier said than done.
Buying off plan
It can be very hard to tell what the finished house is going to look like from brochures and plans. As a result, some aspects of the house may be different to expectations. One such of these may be the size. In general, the size of new build homes is smaller than their older counterparts. As such, it may be the case that not all your belongings will fit. There has recently been an increased demand for “micro-homes”. These are properties that are under 37 square metres, or roughly the size of a tube carriage.
Getting a mortgage on your new build home
Read the fine print
Finally, there could be extra costs included with buying a new build home. This could start with paying ground rent to the developers. New builds can either be sold as freehold or leasehold. Leasehold means that you will not own the land that the property sits on, and so will have to pay rent. You may also have to pay rent and upkeep charges on communal land. It is very important to check to see whether the property you’re buying is freehold or leasehold.
As well as this, there could be future costs involved too. For example, there could be articles written into property deeds requiring the homeowner to pay for some things. If the council doesn’t take on the development, then the residents may have to pay for road upkeep. These articles may also ban you from certain activities or practices. These could include parking a van on your drive or even owning a pet. For these reasons it is very important to read the fine print on all documents.
New build mortgages
Every lender has their own definition of new build mortgages, so getting one may be confusing. Here we will describe it as a mortgage taken out on a property built less than a year ago, or is still yet to be completed.
It may be more challenging for you to get a new build mortgage as not all lenders offer them. As well as this, it may take longer and be more complicated than normal mortgages. One of the main reasons lenders may not be keen on these mortgages may be because its hard to get a true value of a new build house because of the “new build premium”.
If you want to find out more about new build mortgages, and whether you’re eligible for one, call a Promise Money advisor now.
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