Buying A New Build Home – What Are The Differences?
Earlier in the year, I wrote about new build homes in Bradford on Avon click here, since then the sales market has been incredibly busy across all price ranges and for both new and resale homes. Cobb Farr have and continue to have a thriving reputation for dealing with quality new homes builders e.g. Ashford Homes, Autograph Homes, CG Fry , ML Homes and JY developments to name but a few. These companies have all reported good levels of sales from keen buyers who had been released to view their fantastic homes after the COVID-19 lockdown.
These high levels of enquiries, has led to some developments returning to ‘selling off plan’ i.e. buyers finding their ideal homes prior to it actually being built. This is a trend that hadn’t been seen in the market for quite some time prior to the pandemic.
There are a number of differences that a buyer may encounter when purchasing a new rather than a second-hand home, with the obvious one being that there is no waiting for a vendor to find and buy another home therefore extending the ‘chain’. This fact, coupled with a potentially quicker transaction, may also be part of the popularity of new homes.
Other differences may include; dealing with the developer directly (no intermediary estate agent) a buyer being asked to exchange contracts within 28 days, using pre-arranged searches, having a choice of how the house is finished and completing on notice / longstop completion.
Viewing a new build home
Development sites of typically more than 5 properties tend to have a show home i.e. a finished house, dressed with furniture to showcase the final product. New homes builders will either have a dedicated in-house sales agent or have their estate agent meet prospective buyers on-site to show clients around the show home and indeed the site-dependent upon the stage of the build. Some will also have virtual tours if the build is at an early stage – example here. Some will also want viewers to have been financially qualified – this means having spoken to an IFA (independent financial advisor) and have an agreement in principle (AIP) from a mortgage lender either prior to viewing or indeed prior to making any offer.
Having your offer accepted:
Any new homes builder may offer incentives during or prior to negotiation for example inclusion of white goods in the property, carpets and floor coverings, SDLT ( stamp duty) contributions or even cash back. If a buyer is taking advantage of the Help to Buy (HtB) scheme, then some ground work before making an offer is advisable. There are some large changes on the horizon with HtB where almost all the criteria will be different from March 2021. HtB will only be available on new build homes and for first time buyers and to a maximum purchase price of £350,000
Once agreed, and almost without exception, a reservation deposit is requested. This is not unheard of in second-hand sales but much rarer. This deposit will form part of the entire purchase price and can range from £500-£10,000 dependent on the agreed sales figure. It is normally partially refundable in line with the NHBC Consumer Code click here and may vary if a purchaser is using Help to Buy or a shared ownership scheme.
A quicker legal process for new build home?
Invariably the developers will request an exchange of contracts within 28 days from the date a buyer’s lawyer receives the contract paperwork from theirs. This is quite commonplace although due to other circumstances, not always that easy to adhere to. In order to try and fall in line with this, (and subject to your mortgage lenders criteria) the builder’s lawyer may offer to supply local authority searches to your solicitor. These documents are necessary forms that could take up to 2-8 weeks to be received from the council and can sometimes cause a delay in the process. A recommendation from Cobb Farr is always to look to appoint a local and independent lawyer to help the conveyancing process.
Choices and Upgrades:
A vendor changing the house for you prior to completion? Not in resale homes but something certainly buyers ask for from their new build homes’ developer. If the desired plot / house is not finished, it may be possible to negotiate with the builder to upgrade the finish or change paint colours, kitchen layout etc. Flexible developers will try to accommodate a buyers wishes and will have to stipulate any changes in the contract – these changes are normally made after exchange and prior to completion.
The new home will be completed by the developer, normally, as per their build schedule and this may be some way into the future where upon exchange a longstop date may be agreed. This date could vary from the completion of a buyers sale if a chain does not want to wait and therefore alternative temporary accommodation is a must. The longstop date is a date where the building must be complete, signed off by the regulatory authorities and full monies transferred. Sometimes with all party’s consent, this date may be brought forward.
There are various other intricacies of the buying process of a new build home that might be different to any other but we at Cobb Farr are always on hand to help our clients and offer our expert advice.