New build properties are appealing to buyers for many reasons.
- Everything is new.
- Maintenance should be minimal for the first few years.
- The home will be more energy efficient than many older properties meaning lower utility bills.
- A warranty may be available giving peace of mind if a fault develops.
- You may be able to negotiate a discount or other incentive from the builder. In some circumstances they may even accept your existing property as a part-exchange.
- You avoid bidding against other interested parties at a closing date.
The purchase of a new property from a builder, however, differs from the usual purchase of a second hand property in many ways and there are a number of things which buyers should bear in mind.
- When you reserve a new build property you will have to pay a reservation fee. Then once missives are concluded (i.e. there is a binding contract between you and the builder) you are likely to be required to pay a further deposit. There are only limited circumstances when you will be entitled to a refund should the transaction not proceed.
- If you are buying from a builder early and off plan (i.e. before the property has been built) you will only be given an anticipated date of entry, which is not guaranteed. If the development is held up by bad weather or any other unforeseen circumstance this date could slip. Most builders will now agree to include a long stop date which means if the property isn’t ready by a certain date you can terminate the contract and get a refund of any deposit paid but the long stop date could be as much as 12 months after the anticipated date of entry.
- If you are one of the first to buy in a new development you will have more plots to choose from and some may have bigger gardens than others but the downside to this is that when you move in there may still be work going on around you so you may be living on a building site for a while.
- You need to be clear about what the builder is including in the price and what you will need to pay for as ‘extras’. Check, for example, if turf in the garden is included; whether flooring is included etc. and remember that any show home will likely be full of lots of upgraded items that won’t be included in the advertised price.
- When you purchase any property there are a number of searches that your solicitor will need to see. Normally it is the responsibility of the seller to produce these but it is usually the case that builders will refuse to provide any searches which means that you will have to pay for these yourself. Check the cost of these with your solicitor at the outset to be sure that you have budgeted for them.
- When you move into your new home you are likely to identify a number of things that aren’t quite right, for example, doors may not open and close properly, tile grout may be dirty, plaster may have cracked. These are known as ‘snagging’ issues and some builders can be slow to deal with such issues. If possible, you should request a snagging inspection before the date of entry (i.e. before you pay the balance of the price) and try to have provision made in the contract for these matters to be dealt with before you move in.
- A new build house will depreciate in value the minute you move in. Even in a rising property market you may not get your money back if you have to sell within a year or two, especially if you have bought in a larger development where there are still brand-new properties available.
If you are thinking of buying from a builder please get in touch with a member of our residential property team.
Katharine Smith, Director
The opinions expressed in this blog are of the author only and do not necessarily represent the opinions of Blackadders LLP.
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