The advantages of buying new are fairly obvious. The house will meet the latest building codes and energy efficiency standards, there’s no onward chain, blind bidding or offers over the asking price, and, perhaps best of all, no redecorating.
“With a new home you can put your stamp on it in a way that’s never so easy with an existing property,” says John Slaughter at trade body the Home Builders Federation (HBF). It is, and this is a phrase you will hear a lot in the new-build industry, “a blank canvas”.
On top of this, developers have come up with a wide array of incentives for buyers, from carpets or white goods to offers to pay towards your deposit, stamp duty or legal fees. Some will even offer part exchange for your old home, taking you out of a chain completely.
Of course, you may end up paying for these perks in the asking price – some estate agents suggest that new homes can sell at as much as a 10% premium. Nevertheless, the incentives are attractive, particularly to first-time buyers and investors.
The inevitable drawbacks
If all this sounds too good to be true, it probably is. For a start, this being house buying the purchase process is unlikely to be entirely without stress.
For instance, while you may not have to contend with a chain, you will have to meet the builder’s timetable. Once you have decided to buy the house you will have to put down a reservation deposit of perhaps £500 or £1,000. You will then have 21 or 28 days, depending on the developer, to sort out your mortgage and exchange contracts.
Should you miss this deadline, which is a distinct possibility given the pace many solicitors and mortgage lenders move, the developer may withdraw some of the incentives originally offered or even back out of the deal.
If you’re buying the property before building work is complete or before it has even started (known as off-plan), there is no guarantee it will be finished on time. The contract will only specify that completion is “on notice” – perhaps seven or 14 days after the building is finished.
Detecting the defects
More commonly, though, the problems won’t begin until you have moved in. New homes have become notorious for “snags”: minor defects that remain after the building has been signed off.
These include anything from paint splashes or chipped tiles to faulty electrics or dodgy plumbing. The most recent HBF customer satisfaction survey found that more than 90% of new-build owners reported problems to the builder after moving in.
Most new houses come with a 10-year warranty, usually from the National House Building Council, which will mean it has been inspected before being signed off, and this is something you should look out for.
The average new house could have as many as 100 minor defects, which the builder is responsible for putting right for the first two years after purchase. The problem is that it’s not always easy getting them to do so. Where possible get a deadline for remedying snags written into the contract.