The new year can be such an exciting time, full of promise and challenges. Perhaps you’re finally going to use that gym membership, or run that marathon. Maybe you’re going to travel more. Or you could have decided that this is the year to buy a new home. If you decide to purchase a new build rather than a secondhand property, there are some crucial things to be aware of, particularly if you have bought a house before and think you know the drill. Here are six things to know about buying a new build this year.
1) Find out about the Developer (house builder)
Not all developers share the same level of professionalism and quality. Do your research. Visit other sites that the developer has built and see if they still look good. Ask the residents of the development how the home buying process was, and whether or not the quality of the build is up to a high standard (and don’t forget to ask them if the service charges have jumped up – it’s been in the news recently).
Most warranties do not cover workmanship and the quality of the finish. Make sure you’ve done your homework. Stay on top of the developers throughout the life of the build if you choose to purchase a home from them.
2) Know the risks of buying “off-plan”
Buying a home ‘off plan’ is a great way to get a discount on the purchase price. Of course, you then run the risk of work being delayed and your completion date being put off indefinitely.
When you exchange contracts, ensure the builder includes a ‘long stop’ completion date. This means they will be liable for compensation if the completion does not occur on that date. It also allows you to withdraw your offer to purchase without any penalty if they fail to meet the date. This could be crucial if you are buying ‘part-exchange’ and the sale or vacancy of your old house is contingent upon your occupancy of the new.
Beware of how early you purchase an off-plan home, as it could affect your mortgage offer. Most offers are viable for only 6 months, so if the build takes longer than that, you run the risk of losing your holding deposit.
3) NHBC Warranties
The NHBC is an insurer which gives certain guarantees to the home for the first 10 years after the property has been built. Just as with any other insurer, make sure you read the fine print. Don’t hesitate to pass along any warranties or insurance products to your conveyancing solicitor to review. Your claim could be refused if you do not follow the policies and fail to take note of what is covered (or not) by the insurer.
4) Take care of ‘Snagging’ problems.
New builds are often construction sites for a year or two, meaning there can be debris or problems with the installation of appliances when you first move in. If you include a snagging provision in your contract, then the burden is on the developer to correct certain issues. It will include things such as faulty ovens, incorrectly connected waste pipes and even require the removal of skips at their cost instead of yours. By including this in a contract, if they fail to perform, then they will be liable for breach of contract.
It’s also a good idea to invest in a ‘snagging’ survey. These are designed especially for a new build. Shortly after completion of construction, an inspection will be carried out, covering everything from minor cosmetic problems to significant structural or foundational defects. If your survey uncovers anything, your developer is required to fix any issues that occur within the first two years of completion.
5) Get your own solicitor
Sometimes developers will want potential buyers to use their solicitor in the property transaction. Their firm will have done all the title searches and have a bundle of paperwork already prepared for the conveyance.
The problem is, with only one or two firms doing all of the due diligence, mistakes can be made, and issues with the title can develop later down the line. Hire your own, independent solicitor whom you can trust to diligently investigate the title and review the contract solely on your behalf. Everyone has the right to choose their own solicitor. The Solicitor’s Regulation Authority is clear that a client can select a lawyer or solicitorwithout any pressure being exerted upon them.
6) Keep your eyes out for government help schemes
There are several initiatives backed by the government that encourages first-time property owners or purchasers of a new property.
The Help to Buy: Equity Loan scheme allows buyers to borrow up to 20% (or 40% in London) of the purchase price from the government, with just a 5%deposit. The Starter Homes scheme has been announced but has yet to be enacted. New builds would be offered with a 20% discount. The initiative was announced in 2014, but so far, not a single starter home has been built. However, if it is eventually launched, buyers stand to benefit from a significant discount, so it’s worth watching this space.
If you are thinking of buying a new-build property, you are very welcome to talk to Stuart, Rosie or Wayne in our Conveyancing team – 01883 708155. They will be happy to help you.