According the Office of National Statistics (ONS), over 230,000 new houses were built last year in the UK; rising from the low count recorded in 2019-20.
With so many new homes being built, and the Government keen to raise those numbers, we’ve seen an increased number of people asking questions about new builds.
In this article, Conveyancing Partner Clare Hallett looks at the advantages and disadvantages of buying a new build and outlines how the conveyancing works on new build properties.
What are the advantages of a new build?
New builds are usually more modern than older homes, so may be more equipped with smart home features. They also come with everything pre-installed.
The kitchen, bathroom, bedrooms etc will all be new and unused, so your home should be relatively low maintenance and there shouldn’t be much work to take on when you move in!
There are also some government schemes which only apply to new build properties. The Help to Buy scheme in particular can be really useful for homebuyers as it lends buyers up to 20% of a property. Find out more here.
Built to last
Lastly, new build homes are built to the latest building regulations. This means that energy efficiency would have been prioritised, keeping energy use low and resulting in lower bills!
They may also benefit from renewable energy sources such as solar panels or ground or air source heat pumps such features are likely to make them attractive on the resale market.
Related: Selling your home - What documents and disclosures do you need?
What are the disadvantages of a new build?
New builds are often sold at a premium making them more expensive than existing homes. Lenders can also be stricter with how much they’re willing to lend on new builds, meaning you might need a larger deposit to buy your home
In addition, developers can often impose strict deadlines for exchange of contracts. This can be as short as 28 days which can be tricky to achieve if you are in a chain.
‘Off Plan’
Often, new build homes are sold ‘off plan’. This means that the house won’t be fully built at the time of exchange so a fixed completion date can’t be offered.
Completion will therefore be on notice which means that once the house is ready you will be given 10 days to complete.
If you have a house to sell and don’t want to move out and wait for your new home to be ready you will need to agree the same provisions with your buyer. The longer the chain you are in the more difficult this is going to be.
Often any incentives which the developer has provided will be lost if completion cannot be achieved by their deadline.
Withdrawn mortgage offers
In times of rising interests rates you need to factor in that the completion date for your lovely new home might be months from exchange.
Mortgage offers typically have a 6-month expiry date. However, a mortgage offer can be withdrawn by a lender before completion. This could leave you in a position where you have exchanged to buy a house and don’t have a mortgage offer.
With rising interest rates this is a significant risk and careful thought needs to be given as you will still be contractually bound to complete even if you no longer have a mortgage offer.
However, a lot of these disadvantages can be avoided if you find the right home and developers.
Do new build houses keep their value?
Over time, a new build is just as capable of appreciating in price as any older property. It may be difficult recoup the value if you decide to sell it soon after buying. It can also be more difficult to add value as everything is new and shiny from the beginning.
However, new build homes can often be worth more than existing properties over time (of course, depending on a host of factors) and as they are more energy efficient their appeal is likely to remain strong.
Related: How much does conveyancing cost when buying a house?
Is a new build good for first time buyers?
Having never purchased property and likely never dealing with any decoration or renovation before, first-time buyers can benefit from the low maintenance that comes with new build homes.
They can also benefit from lower bills, as a result of new builds meeting newer regulations on energy efficiency and may even have renewable energy sources fitted,
Some Shared Ownership and Help to Buy schemes for example, are only available to first-time buyers.
The legal work involved in a new build is more complex and there is much more paperwork as the legal title is being created for the first time. This usually means that the legal fees and Land Registry fee are higher
There are other some other schemes that are not exclusive to first-time buyers that you could still benefit, such as ISAs. Read more about those here.
How much deposit do I need for a new build property?
How much of a deposit you’ll need to put down for a new build property depends on various factors, but could be anywhere from 5% to 20%.
Often, for new builds, lenders will require around a 15% deposit. However, you should speak to a mortgage advisor to get a more accurate estimate.
As a general rule, the higher your deposit the better as the more you pay ‘up front’ the more likely you are to get a mortgage and the lower your interest rate will be.
The many government schemes available, such as the Help to Buy scheme and Lifetime ISAs, can help you afford a higher deposit. You can also use a loan or gifted sum from your parents to help you afford a home. Read about ‘the Bank of Mum and Dad’ here.
Can you reserve a new build without a mortgage in principle?
You could, but if you are first time buyer it makes sense to have all of your ducks in a row to ensure that you give the best impression. You also need to understand what you can afford to pay, particularly with interest rates as they are.
Can you reserve a new build before selling your old house?
It’s unlikely that the sales office for a national developer would allow you to do so, however some developers offer a part-exchange scheme which might be worth looking at if you want to buy a new property but don’t want the hassle of being in a chain
How does conveyancing work on new builds?
Conveyancing on new build properties is broadly similar to any other property, however there are potentially more things that can go wrong.
Remember, that in most cases your new house will involve the opening of a new title at the Land Registry and there are lots of pitfalls and implications if this is not done correctly.
Your conveyancer also needs to check that the house has been built in accordance with the planning permission and also that it has the necessary sign off from building control
For this reason, it’s important to instruct an experienced solicitor to handle the conveyancing for you as they can ensure that any issues are identified and resolved.
Read my other article where I've outlines the conveyancing process when buying, here.
When should you instruct solicitor new build?
It’s best practice to instruct a solicitor as soon as you have decided on the property that you want to purchase.
This way, a solicitor can advise you through the entire process and get things done quicker than if you were to instruct them later on.
At the latest, you should instruct a solicitor once you have reserved the property as they can then assist you in transferring the ownership of the home to you.
Specialist Conveyancing Solicitors
Our bright and experienced Conveyancing Team is one of the largest in the area, and they would be happy to assist you in the purchase of a new build home, and the sale of your current property (where applicable)!
Please feel free to direct any questions our way. To get in touch, you can call us on 01202 499255 or fill out the form at the top of this page. We offer a free initial chat for all new clients.
We’ve also put together a guide to the conveyancing process for selling, which can be read here.
Comments