Buying a new build not only means you will benefit from a brand new home to live in, it can also provide you with significant financial and practical benefits when compared with buying an older or resale residential property. Below we highlight some of the advantages of buying a newly-built home, whilst flagging up the potential pitfalls that might arise along the way.
The benefits of buying new
When buying a new build, you may be eligible for financial assistance in the form of a low cost loan through the Help to Buy: Equity Loan scheme. This is a government scheme designed to help over 18s in England buy a new property with just a small deposit. The new scheme will run until March 2023 and, as with the previous scheme, the government will lend homebuyers up to 20%, or 40% in London, of the cost of a newly-built home with a registered homebuilder.
The government has also recently launched the First Homes scheme for local first-time buyers and key workers earning less than £80,000 per year, or £90,000 in London, albeit lower if set by the local authority. The scheme is designed to help those providing essential services or with local connections to get on the property ladder by offering residential properties discounted by at least 30% compared to market prices. With properties already on sale in the East Midlands from June 2021, further designated sites are now set to launch across England.
Even if you’re not eligible under one of these government schemes, very often developers will provide potential purchasers of a new build with attractive financial incentives, from paying any stamp duty or legal fees due to giving you the option to select certain design and decor aspects for your new home — typically including a warranty to protect you against any defects in respect of the entire build that may later come to light after you’ve moved in.
For existing homeowners, the developer may even offer a part-exchange on your current property. Even though you may get less than you would if you were to sell your house on the open market, by partly funding your new home with the proceeds of a part-exchange deal this can make the process far simpler and less stressful — not least because this will facilitate exchange and completion of both properties, removing the risk of your buyer pulling out.
The drawbacks of buying new
Although the advantages of buying a new build can be tempting, there are also several drawbacks. Unless you buy a new home that is already built, this runs the risk of running into complications during the construction phase – from unavoidable delays due to poor weather, to the developer being unable to complete the build at all down to a lack of funding. Further, with off-plan properties, where you’ve seen the show-home and chosen a replica property, this doesn’t guarantee that yours will be completed either on time or to the same standard.
In most cases, you will be given the option to pull out of your purchase prior to completion, where any warranty should cover your deposit. This means that you will not lose your deposit if a major problem comes to light either during or post-construction. You will also usually be given the opportunity to complete a snagging list for more minor issues. Still, waiting for your home to be completed can be a stressful time, especially if you’re in a chain where the buyer of your existing property needs to exchange and complete by a certain date.
All that said, many of the potential pitfalls arising from buying a new build can be safely navigated with the help and advice of a specialist conveyancer — from helping make sense of the developer’s terms and conditions to the protection afforded to you under any warranty.
Legal disclaimer
The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.
