Buying from a builder is appealing to home buyers for a number of reasons:
- Many people like the fact that they will be the first to live in the property
- Repairs and redecoration costs should be minimal for the first few years
- Buyers can often select fixtures and fittings to tailor the property finish to their taste
- New properties usually come with guarantees.
- Homeowners can enjoy lower running costs and energy bills by living in a more modern, energy efficient home
- Incentives may be available (e.g. payment towards land and buildings transaction tax)
- The builder may be willing to take any existing property as a part exchange
There are, however, many ways in which the purchase of a new property from a builder differs from a usual purchase of a ‘second hand’ property and there are a number of issues 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 you are likely to be required to pay a further deposit. There are only limited circumstances when you will be entitled to get these back should the transaction not proceed.
- You need to be very careful 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.
- 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 reveal any searches which means that you will have to pay for these yourself.
- 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 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 back any deposit paid but the long stop date is often six months after the anticipated date of entry.
- Inevitably when you move into your new home you will identify a number of things that aren’t quite right. These are known as ‘snagging’ issues and builders are sometimes 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.
- Just like a new car, a new build house will depreciate in price the minute you turn the key in the door. 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 of buying from a builder please contact our team for further advice.