In this brief guide, we are going to discuss questions to ask when buying a new build house so you can be sure you are getting good value for your money.
Buying a new house has its perks, you get a freshly designed and built house which is now your home but even though its new there are still questions to ask when buying a new build house if not you could end up incurring more costs for yourself further down the line.
The Uk builds thousands of new build homes each year, some of the perks of these homes are
The appeal of new builds includes:
Decorated to your taste
Space maximising design
No moving chain
Part-exchange often available
Some of the downsides of new build homes are:
New build homes are often overpriced and this means your mortgage may end up being worth more than the property is valued at. This is known as negative equity.
Because of this, you may find that the mortgage market for new build homes is smaller than that for much older homes.
You may also find it is harder to remortgage your home due to the fact that you may not have enough or any equity in your home due to your mortgage being worth more than your property is valued at.
Questions to ask when buying a new build house
Buying a new build house has some challenges, in most cases, there may be no neighbours which you could ask about the area and no historic data on crime etc on the area as it might just be a new settlement.
Below are some of the questions you should ask when buying a new build house:
Will a comparable old home be cheaper?
New builds already have about a 15% premium added to them over their real value. So in comparison to a much older home do the benefits of buying a new build home outweigh the cons.
New build homes may be more preferable as they are usually more energy-efficient than older properties and usually have updated styling and look.
How much interest has there been on the new build property?
Asking the developer how much interest there has been on the property will give you an indication on if you are overpaying for the property or if the property price can be negotiated on.
You shouldn’t necessarily trust what the property developer says but it may give you some indication on how to negotiate.
What are the estimated running costs?
Another very important question to ask when buying a new build house relates to the running costs. These will allow you to calculate if the property is truly within your budget or not.
Is the property freehold or leasehold?
Most new-build flats will be leasehold but you should still ask this question. If your property is a new build then it will likely be a leasehold for 99 years at the very minimum and most mortgage lenders may want to see a minimum of 70 years on the lease after the mortgage term would have ended.
Leaseholds will also come with fees such as ground rent, maintenance rent and have certain rules such as rules on having pets, making alterations to the flat etc
If you’re buying a new build flat or apartment, it will almost certainly be a leasehold property – meaning you have a lease from the freeholder to use the property for a certain amount of time.
What other costs come with my lease?
If your property is a leasehold then a question to ask when buying a new build house is what other costs will be associated with the property. Some of the main costs are Service charges, ground rent and maintenance costs.
You should also ask what rules are there in regards to how the property costs rise.
Can I buy my freehold?
Will you have the first right of refusal on the freehold as the owner of the leasehold? This is an important question to ask when buying a new build house. If you are told you can then get it in writing with an assumed price.
How many other properties have they sold and who has purchased them?
Knowing the sort of neighbours you may potentially have is very important. This could be families, offices etc and could end up affecting the future value of your property.
How long do you have for snagging?
When you buy a new home, you will have a set amount of time to report any ‘snags’ to be fixed by the property developer. You should inquire from the property developer how long the snagging process is and how the process works.
Is the new build developer open to offers?
In some cases, new build developers will be open to offers on the property they are trying to sell. You should ask if they are as this could end up saving you a few thousand pounds.
Can you use your own conveyancer?
A lot of new build property developers try and pressure prospective buyers into using their own conveyancer.
They may claim it is there to save you time but in reality, you may not have any legal protection if you discover something wrong with the home in the future as the new build conveyancer may not work for you.
It is always better to hire your own conveyancer who is looking after your best interest.
Are there any plans to extend the development?
Asking this question when buying a newbuild is very important as developers will often buy adjoining lots and this means they can build on one lot and then build on to other after having sold off all the units on the first lot.
This could mean you have now paid a much higher price for a property which is about to have some of its views blocked off by another high rise building.
Are there any restrictive covenants?
Restrictive covenants are very important as they could affect your ability to do much in the home.
This could include changing the appearance of your property and this could affect things such as having a satellite dish, changing tiles, building an extension, changing the colour of your flat etc Restrictive covenants don’t just affect you, they may affect your ability to sell the property as they stay with the property.
Your conveyancer should inform you of all restrictive covenants the new build property has before you agree to buy it.
When is bin day?
Knowing when the bin day is important as it will prevent you from doing guesswork on each day of the week until you figure out when the bin day is.
Is there parking and is it free?
Most newbuild properties are flats and hence asking about the parking situation is very important when buying a new build house.
You will want to know if there is parking allocated to the new build house and if it has a cost or a particular parking slot number. Is there a garage key for the parking and is the parking inaccessible at any time?
What is the crime rate in the area?
In some cases, new build properties will be built on new settlements where there are no historic data points on what the crime rate is. In this case, you should look at surrounding towns to see what the crime rate is.
If the crime rate is high then you could bet that in this case there will be some crime which will eventually pour over to your new shiny settlement.
This is definitely a great question to ask when buying a new build house. In some cases, there may be crime reports which you can purchase online.
Are there any commercial units?
Some new-build flats will allocate commercial space on particular floors in a block of flats or on the ground floor of a block of flats.
Asking if there are any commercial units allocated or if there are any plans to allocate commercial units is a very good question to ask when buying a new build home as commercial units could make it hard for you to get a mortgage or remortgage on the property.
Are there any restrictions on home improvements?
If you are buying a new build flat then this will likely apply to you as most flats are sold as leaseholds which means you may need to get approval before making any structural changes or enhancement to your flat.
This could be as little as changing the flats in your bathroom. IN most cases, you will also need to pay a fee before the freeholder will honour your request.
Will you be able to add value to the new build property?
An Important factor for many prospective home buyers when buying a home is if they’ll be able to add value to the home by making home improvements such as making the kitchen bigger or nice, adding a loft or conservatory to the back.
This is an important question to ask when buying a newbuild house as if you aren’t able to add any value then you may not want to buy this property.
New developments will usually have a restricted development covenant attached which could mean that new additions are not permitted.
What will the property look like when finished?
A very important question when buying a new build, especially when you buy a new build property off-plan is to know what the property will look like when it is finished.
Most property developers may have an animation of what the new build property is going to look like when the development is completed. This means, street lights, pathways etc.
What are the annual fees?
Some properties may have annual fees. This is particularly the case if the property is a flat as most flats will have leasehold fees such as ground rent etc This is a very important question to ask when buying a new build house
When will the flat be completed?
You should check to see when your flat will be completed as this is very important to your mortgage.
Most mortgage lenders may provide you with a mortgage offer which will be valid for up to 6 months and after which you will then need to reapply for the mortgage or get an extension of the mortgage offer by the mortgage lender.
What warranties come with the new build?
What warranties will come with the new build home? Most new-build homes will have a 10 year Zurich warranty or an NHBC 10 year warranty.
Your conveyancer will have secured this document for you. The warranty will provide you protection should anything go wrong with your new build house. The new build developer may also offer some warranties, you should ask your conveyancer about this.
What financial incentives can the new build developer offer?
Some new build developers may offer you further financial incentives in order to buy from them. This could be paying off your stamp duty or paying your mortgage fees.
This is a very good question to ask when buying a new build house as this could be financially beneficial to you.
When can you move in?
Another very important question you should ask is when you can move into your new build house. Most new build properties will be sold off-plan.
This means you are putting down your property reservation without seeing the property An important question to ask when buying a new build house is when you will move in.
The property may have finished but the fittings such as gas and electric fittings or plumbing fittings may not have been fitted. This means that the date you move in may be much longer from when the property is finished.
Once the property is finished your conveyancer will still need to carry out all the necessary searches on the property before you can then complete on the mortgage by way of exchanging contracts with the property developer.
Will roads around the development be adopted by the local council?
If the roads around the new build property are private roads then you may find that not a lot of care is going into them and they may be left damaged for long periods of time.
If the roads are adopted by the local council then it will be the council’s responsibility to repair the new roads when they become damaged. Your conveyancer will let you know which is the case.
What happens if something goes wrong?
This is a very important question to ask when buying a new build house. Your First point of contact if something should go wrong will be the property developers who sold you the house.
We have seen numerous stories of properties developing damp, leaking roofs or bricks falling at the exterior of the new build house or other issues which simply should occur.
If the new build developer doesn’t help you or agree to resolve the issue then you can claim on the NHBC or Zurich ten year warranty if you are still within its eligible term.
All home builders should adhere to The Consumer Code for Home Builders. Industry-led, the code works to ensure buyers know their rights when buying a new build property and lays out a system for dealing with complaints.
If you feel like you are out of options then seek legal advice.
Getting a mortgage for a new build home
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
In this brief guide, we discussed questions to ask when buying a new build house. If you have any further comments or questions then please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.