Buying a home can be an exciting time but also one full of trepidation, and it’s perhaps this that sees many look towards new build properties where possible. In the UK, 158,190 new homes were built in 2023, (2024 figures are not yet published) meaning many could move into a property and be the first to call it home. This still falls somewhat short of planned numbers though. Since Labour came to power, targets for house building have jumped up and where the previous government aimed for 300,000 new homes per year, Labour wants to see 1.5million new homes built over the next parliament. Time will tell whether this is possible but for those aiming to be residents of a new build property anytime soon, we’ve put together this guide to help answer your questions.
What is a new build home?
If you’ve found yourself landing on this page without fully knowing what a new build home is, don’t worry. We’ll quickly explain so you can either carry on reading or head off elsewhere!
A new build home is one that has been recently built and had no previous owners. You’ll be the first to move in! Perhaps surprisingly, the term new build can also be attributed to existing properties where renovation has taken place to such an extent that it is now considered a new dwelling.
New build properties come as completed builds or off-plan new builds.
Completed new builds
As the title suggests, these properties are already built and are purchased as seen. You’ll still be first to live there and can fully explore the property before deciding on whether you want to make an offer for it.
Off plan new builds
An off-plan new build is where the property has not yet been built and you, as the buyer, have the potential to have input on design specifics, finishes, and more. These are often purchased based on show-home examples or architectural plans.
Should I buy a new build? What are the benefits?
If you are looking for a new home, a new build can be a great option. They provide numerous benefits that you may not find within a property that’s been lived in before. Let’s take a look.
Low maintenance
A new build is, as the title suggests, new! That means there won’t be any frustrating maintenance jobs to rectify or vast amounts of decorating to undertake. And, if there are any signs of poor construction, decoration or installation, your snagging survey will flag them and ensure that the developer corrects them.
No chain
One of the most destabilizing factors of a house purchase is the chain. Should there be an issue with a buyer or seller further down the line, it will stop you from being able to complete your property purchase 9 times out of 10. With a new build, this concern is completely removed as you are buying from a party that has no onward chain to worry about. Free from the constraints and complications of a chain, you complete the move at your own pace.
Lower bills
We all know that energy bills are frustratingly high and a home that delivers good efficiency delivers lower bills. New build homes help to do this. According to Zoopla, 85% of newly built homes have an EPC rating of A or B whereas only 4% of older properties can manage this. With excellent insulation, efficient appliances and in some cases, triple glazing, you can see bills start to fall.
You get a say in the design
In many cases, the developers will allow you to choose certain design features of the home, allowing you to make the home your own from the start. This could be door styles; worktop finishes and so much more. This isn’t always the case though and some developers will charge extra for specific alterations so double-check before compiling your wish list!
You can buy it before it’s built
A developer may have laid out some grand plans for a housing development and you’ve been impressed but you can’t see a physical building anywhere! Don’t worry! These off-plan builds will get built and you can be the first to get one. You’ll need to secure a mortgage and pay a reservation fee but then you can just sit back and wait while the team of builders complete construction of your home.
Discounts and incentives
Buying the land and constructing the properties doesn’t come cheap so developers want to get their money back as quickly as possible and start selling houses. To do this, they often offer some fantastic incentives to interested buyers. This could include paying your stamp duty, your deposit or helping you sell your existing home. Incentives will vary per developer and in some cases, none will be offered at all.
What is the buying a new build process?
We can divide the process for buying a new build into three separate processes. Before, during and after.
Before buying a new build
Before you buy a new build, you’ll want to find out more about the home and the area, investigate mortgage options, look into conveyancing and more.
Find out about the developer
You’ll want to be confident that the developer has a good track record of building, safe, high-quality housing. Look at their website and social media profiles. See if you like what you see. Check out reviews and should any of the development already be completed, have a conversation with other residents. This information will help give you the confidence to proceed or be sufficient enough to make you look elsewhere.
Look at mortgage options
You’ll need an idea of your budget before you try and buy a new build property. Mortgages for these homes can be a little more complicated, so you need to prepare. A typical mortgage offer only lasts for six months but special new build mortgages are available that have an extended period. This is particularly handy as new builds can often be delayed. A mortgage broker will help you with this aspect.
Furthermore, each lender may have very specific rules for new build purchases, this could see you being offered less cash to borrow than on another mortgage. Once you’ve found a suitable mortgage provider, get your mortgage in principle. This will help give the developers the added assurance that you can and will buy their property.
Look at schemes to help fund the purchase
The government wants the new homes to be built, but that building will only continue if the properties sell. As a result, various schemes are in place to assist buyers.
The Deposit Unlock Scheme enables first-time buyers to secure selected new builds with just a 5% deposit. Second-steppers can also find themselves eligible for this offer.
The First Homes Scheme enables first-time buyers the opportunity to purchase a home at a discounted rate of at least 30% compared to the market value for similar properties. This discount remains on the home forever meaning it remains an affordable form of housing no matter when it is next purchased. This scheme is income and location-based with a cap on property value too.
Shared ownership is a popular option where a portion of the home is purchased from a housing association. With a smaller percentage being bought, the deposit and mortgage payments will be less than if buying a home outright although rent for the remaining portion will still be due.
Find a conveyancer
Doing this now will put you in good stead when the process picks up pace. Conveyancing for a new build is quite complex and often flags up issues you won’t find with more established properties. Much of their work will take place once you’ve made your offer and paid your reservation fee but investigate your options early for the best results. Ideally, choose an independent conveyancer and not the one suggested by the developers.
Check what incentives are on offer
If your stamp duty or deposit is covered, or certain furnishings come as part of an offer, you could find yourself with more cash to put towards other things. However, should such incentives cover more than 5% of the total property value, you could find your mortgage offer not as high as you expected. Speak to your broker or lender about this before signing any paperwork!
Check there is a warranty
It should come as standard that any new build home comes with a 10-year structural warranty. This will cover you for faults that arise as a result of poor build quality. It is unlikely that your developer has skipped this but as part of your due diligence, ask them. If your home is registered with the NHBC then the 10-year warranty is automatically in place. This warranty is a valuable asset in many ways. Lenders will feel happier lending against such a property and you have added peace of mind that you aren’t likely to be footing expensive repair bills.
Make an offer
With all this done, look at making an offer but be aware of the premium on new builds. They will cost more than older, similar houses in the area but be wise to overpriced property. You have the right to negotiate, so look at other houses in the area and see if the difference between old and new properties is justified.
Pay your reservation fee
You’ll need to pay a reservation fee for a new build home. It’s an amount that comes off the total price for the home and is normally around £1,000 but could be more. Before doing this though, have everything in writing. From the AIP for your mortgage to the warranty from the developer to copies of the plans and practically anything else that relates to the property. It’s all important!
Then, check that the reservation agreement indicates not only how much the fee is but also that it is deducted from the asking price, refundable, includes an estimated completion date, informs you of your right to cancel and contains the details of the property.
You can then pay your fee to the developer if you are happy with the information.
After paying your reservation fee for a new build: the process
Now you’ve paid your reservation fee, things start to pick up a little. Armed with your AIP and a conveyancer on board, you can edge closer to owning a new build. Follow this process to ensure nothing is missed.
Apply for a mortgage
You’ve already been told what you might be able to borrow, and you’ve submitted an offer to the developer, now it’s time to submit your actual application and secure those funds. Remember to go back to your mortgage broker and utilise their experience.
Instruct your conveyancer
With your offer accepted and a mortgage waiting, inform your conveyancer so they can push on with the legal work. This will include all the searches you see in a typical property purchase but may also seem some that are a little more specific. This can take time, so it is useful to speak with your conveyancer at the earliest opportunity. You should also ask them to check the contract to ensure there is a long-stop completion date. This means that should the home not be completed by the agreed date; you can abandon the purchase and be refunded. As mentioned earlier, mortgage offers do have an expiry date so make sure this long-stop date comes before the mortgage offer expiry. If it doesn’t you could face huge penalties if you are then unable to secure a new mortgage and can no longer buy the house.
Book snagging inspections
In most cases, the developer will allow you to book a pre-completion inspection of the home. This gives you the chance to ensure the home is built safely and fully in line with regulations. After you move in, a snagging survey will then uncover any issues that the developer can fix should they require it.
Get insurance
You’ll need insurance and this can occasionally be tricky. In many new builds, the postcodes aren’t yet “live” so it can be hard for insurers to locate where your property is! Speak with the developers to get the information and then relay it to Royal Mail. You should then have your property added to their database and be able to push on with securing your insurance.
Pay a deposit and sign contracts
You’ve already paid a reservation fee but now you’ll need to pay the deposit like you would when buying any other home. This could vary in value depending on whether you have taken advantage of any schemes or saved up a larger sum. Expect anything from 5%-30%.
Completion
With contracts signed and deposit paid, you are almost there. A new build that is off-plan cannot have a completion date so instead of agreeing on a completion date, you’ll be agreeing a “completion on notice”. This means that the developer will continue with the build and then serve you notice once the house is ready. Should the property already be ready, you’ll complete in the normal way.
Moving into a new build
Once everything is signed and sealed, you simply await your moving-in date. Once in, you should look to book the snagging survey we mentioned earlier. This will help detect any issues with the build. It could be poor paintwork, doors not fitted correctly, and a host of other faults. Reporting these as soon as possible will work in your favour as the developer will more likely fix them. If you leave it too late, they could claim you caused any of the issues discovered.
Do you pay stamp duty when you buy a new build?
Yes. Stamp duty when buying a new build is the same as if you were buying any other property. In some cases, the developer may offer to pay your stamp duty or make a contribution to it, but you should check this in advance.
How long does it take to buy a new build home?
The timeline can vary. For properties that are already built, you could follow the typical timeline for buying a house in the UK. An off-plan development though can take a few months or more than a year. You should factor this into your plans if you have a specific timeframe you need to work to.
If you need help with a mortgage for a newly built home, speak to our team. At Mortgage Saving Experts, we have been helping homeowners find the ideal mortgage product for their dream home for years. Contact us today to see how we can set you on your property journey today.
