I recently moved into my very own home after waiting almost a whole year for it to be built. Having experienced the new build-buying process first hand, here are 3 things I’d advise taking into account before putting an offer on a property that hasn’t been built yet.
What will you do if the completion date is pushed back?
When I originally put an offer on the apartment at the start of 2017, I was told by the estate agents that the property would be completed at some point between June and August. But as each month passed, this date got pushed further and further back. I eventually received my keys on the 1st December, far later than initially promised.
Since I was living with my parents before moving into the flat, the postponed completion date was upsetting but it wasn’t the end of the world. In fact, it gave me an opportunity to continue saving more money towards living costs, furniture and emergency savings. I also was able to save more money in a Help to Buy ISA and benefit from a larger government bonus. And since the government scrapped stamp duty for first time buyers just days before I completed, I also saved a few hundred quid in home buying costs.
However, if you’re renting or you’re selling your current home in order to buy the new build, unpredictable completion dates and missed deadlines could cause chaos for you. This is something to think about before putting in an offer.
One aspect of the home buying process that was particularly stressful due to frequently missed deadlines was the mortgage application process. I obtained my original mortgage offer from Nationwide fairly early in the year but after 6 months the offer expired leaving me having to find a new mortgage offer. My second mortgage offer had a deadline of the 13th December, so I’m so relieved that I collected my keys on the 1st and didn’t have to apply for a third mortgage.
Does your developer have a good track record for dealing with ‘snags’?
This wasn’t something I took into account when buying my new build, but having been through the process myself and having read plenty of horror stories, I’d certainly recommend that others do so.
In a perfect world, all new build homes would be immaculate and flawless. However, in reality, the vast majority have ‘snags’ ranging from mild to severe. A snag could be as minor as a chip in the paintwork to as major as a broken boiler. I’d recommend doing some research before buying your home to find out:
A) Does your builder have a reputation for building homes full of snags?
B) If a customer complains about snags, how quickly and effectively does the builder resolve them?
My flat had a fair few snags. However, nothing was so bad that it made the home uninhabitable or dangerous. Shortly after I moved in, one of the managers popped round and spent ages listing all the faults I had identified. Within a matter of minutes he sent someone round to fix the most pressing issues and in the days that followed he continued to rectify many of the other faults.
I’ve spent so much time over the last few months reading horror stories from people who’ve bought new build homes from hell only to find that their developer won’t do anything to fix the problems. As a result, I had visions of collecting my keys and bursting into tears as soon as I walked through the door. Thankfully, that’s not been the case for me and I absolutely loved my new home from the moment I laid eyes on it.
Are you happy with the terms of the lease?
Most new build homes are leasehold rather than freehold. Basically, if your home is leasehold, this means that you own the contents of your property but not the land it stands on. You’ll have to pay ground rent and maintenance charges to your landlord each year. That’s right, I’m a homeowner and yet I still technically have a landlord!
If your home is freehold, you’ll have full ownership of the home and the land and therefore you have far more freedom when it comes to making changes to the property. You also won’t have to pay service charges and ground rent.
In a way, it makes sense for apartments like mine to be leasehold because several homes are built on one plot of land. Most apartments also have communal areas such as stairways, corridors and gardens that need to be maintained. However, for some bizarre reason, many new build houses are leasehold too.
Before buying a new build, find out where it’s freehold or leasehold. If it’s leasehold, read the lease thoroughly – no matter how long it is. Ask your solicitor to go through it with a fine tooth comb and point out any particularly serious clauses that a person without conveyancing experience might not understand.
There have been horror stories in the press where people have bought leasehold homes without reading the terms and conditions only to find out that the amount of ground rent they pay doubles every few years. Not only can this see your living costs surge, it can also make it incredibly difficult to sell the property.
What's the magic word?
Subscribe today and I'll send you the secret password for the free resource library. There you'll find free guides, workbooks and cheat sheets designed to transform your finances