Buying a home is arguably the biggest financial commitment that most of us are likely to undertake in our lifetimes. With a severe national housing shortage, new build properties are an increasingly attractive option for prospective buyers.
Here, Emma Cannon-Jones, a Legal Executive at our firm, highlights some of the things to consider when buying a new build property and advises on how the process usually unfolds.
What Are the Advantages?
• Affordability
Due to the national housing shortage, the government have committed to building one million new homes by 2020. As a result, there is growing interest in new build houses.
Government measures taken to incentivise interest in these properties have been particularly substantial. For instance, allowing you to buy your home with only 5% of the overall deposit amount, with the Help to Buy equity mortgage scheme; giving you a 25% top-up on your savings, through the Help to Buy ISA scheme, and even offering a discount of up to 20% off the price of new homes, in England, with the anticipated launch of the Starter Homes Initiative in 2018.
It is worth remembering that these schemes are only applicable to new build properties, making them particularly attractive to first time buyers who are struggling to get a foot on the increasingly expensive property ladder. Even if you are not a first-time buyer, you will be able to access the Help to Buy scheme, so long as you sell your existing property and complete the two transactions on the same day.
• Polished and Personal Finish
Purchasing a new build offers the satisfaction of knowing that you will be the first to live in your new home. Not only will your property benefit from being shiny and new, but you will also have the option of personalising your home.
New build properties offer you the chance of adding extras to your purchase, such as a selection of flooring and turf options, as well as various electrical appliances. Many of these will be reasonably priced and can be selected to match the colour schemes of the surrounding interior.
Additionally, if you are one of the first to buy at a development, you will have the option of buying ‘off plan’. This means that you will have the freedom to choose the location of your prospective property on the site.
• Quality Assurance
All new build properties come with an NHBC, LABC or an equivalent, providing warranty on structural defects for ten years. As well as this form of assurance, most developers will also provide their own personal warranty on any fitted appliances that you might agree to when making your reservation.
• A Less Stressful Process
When buying an already established property, you can find yourself at the bottom of a lengthy chain. These can prolong the duration of your transaction and thus delay your procurement of a property. However, buying a new build eliminates this possibility and means that, if your plot is already built, you could likely be living in your new home in only four weeks from the date of your reservation.
What Are the Possible Disadvantages?
• Mortgage Offers
Mortgage offers usually expire after around six months after their issue date. If you buy a plot that is not due to be finished by the expiry date of your mortgage offer, you will have to re-apply for your mortgage.
Whilst this will be your responsibility, we appreciate that the process can be a daunting one. At Howells, your designated team of specialists will be available every step of the way to guide you through the process, ensuring the efficacy of your transaction(s). We will work with you and your financial advisor to ensure that everything is in order, allowing us to complete as promptly as possible.
• Risk
As with most things in life, a lack of communication can result in unanticipated results. These can, however, usually be easily avoided. It is worth checking through the particulars of your prospective plot with the sales staff on the site to ensure that both parties have agreed the exact terms of the transaction.
Our new-build conveyancing staff have strong links with many of the UK’s most established builders, meaning that whatever your query, we will be able to advise on it for you and put your mind at rest.
How to Buy a New Build
Whilst transactions can differ slightly, depending on your own situation and the development you decide to buy at, the general steps towards completion will look something like this:
1. Calculating Your Budget
Check with your financial advisor and calculate your budget. Once you know how much you can afford, you will be inevitably better placed to approach sites and reserve your favourite plot.
2. Deciding Whereabouts You Want to Live and Researching Sites in That Area
This might seem obvious but, once you know which area you would like to live in, you can then research the particular features of each site to determine which will best suit your needs.
For example, if you commute for work regularly, a site with good links to the main roads might be more beneficial for you. Alternatively, a site in a quieter area might be more suitable for buyers looking for a more tranquil environment.
3. Visiting the Site and Viewing the Available Show Homes
Visiting the show homes is a great way to get a feel for the kind of home you will be living in. It is also beneficial for allowing you to see the surrounding areas and assessing the convenience of the transport links to and from the development.
4. Reserving Your Favourite Plot
You will be required to pay a reservation fee, some of which may not be refundable. Once you have reserved the property, you will be given a date on which your reservation of the plot will expire. This varies depending on the site in question; however, it is likely to be within 28-35 days after the date of reservation. You will therefore need to exchange contracts with the developer before this date.
5. Instructing a Conveyancer to Act on Your Behalf
When you reserve your property, the site staff will want to know the details of your legal representative. Mortgage companies will not release funds to an individual, thus you will need a solicitor to act on your behalf, so that they can accept the mortgage funds and issue them to the site’s solicitor on your behalf.
When you make your initial enquiry and seek a solicitor, you should check that said firm is on your lender’s panel of accepted legal representatives.
Your conveyancer will also deal with other tasks, such as liaising with the site staff and their solicitors, registering your ownership of and your lender’s charge on the property with the Land Registry and other important tasks.
At Howells Solicitors, we are confident that our conveyancing solicitors can provide you with an efficient, personal and competitive service. We are on the panels of most UK mortgage lenders and we are thus familiar with the procedures of the majority of leading banks and building societies. Our established links with an array of new build developers also means that we are well placed to act on your behalf, no matter your circumstances.
6. Arranging Your Mortgage and Other Financial Sources
Your financial advisor will advise of the best mortgage for your situation and will also be able to help you make your application properly. When your mortgage has been accepted, your lender will then take the necessary measures to protect their interests.
Whilst this is happening, you will be able to attend to the paperwork your solicitor will need from you, allowing them to proceed further. Hopefully, you will be awaiting the results of your searches, which your lender will need carried out, as a condition of your arrangements with them.
7. Sorting Out Your Help-to-Buy Arrangements
If you are using the Help-to-Buy equity scheme or have any Help to Buy ISAs, you will need to make the necessary arrangements with your financial advisor. Once the schemes have been finalised, your legal representative will then liaise with Help-to-Buy to ensure their timely receipt of your funds. This will include obtaining their Authority to Proceed, Exchange and then Complete, as well as other tasks.
Should you have any Help-to-Buy ISAs, you should inform your conveyancer as early on as possible. Failure to highlight these upfront and not carrying out the correct procedures to claim the funds may result in you losing the additional bonus amount.
We are the firm of choice for Help-to-Buy Wales transactions. We completed the first transaction of the scheme and proudly complete the biggest share of their cases of any Welsh law firm. Read all about it in our blog post: Howells Helps to Complete the First Help-to-Buy Purchase in Wales
8. Exchanging Contracts With the Sellers
Once everything is in order, your solicitor will then exchange contracts with the seller’s solicitor (subject to your final confirmation to proceed). Once this happens, both parties are then legally bound to complete the transaction on an agreed date.
9. Arranging Your Snagging Survey
Before you move in, some clients have their own snagging surveys carried out on the property. These can highlight any possible defects or points of caution on your property, which you can then have rectified. Not all clients do this, but it does ensure peace of mind if you are particularly weary.
10. Collecting Your Keys and Moving in
Finally, after weeks, possibly months, of anticipation and stress, you will be able to collect your keys and move in to your new home. Congratulations!
Considering Buying a New Build?
At Howells Solicitors, our teams specialise in new build conveyancing and are recommended by an array of new build developers, such as: Persimmon, Charles Church, Barratt, David Wilson, Taylor Wimpey, Bellway, Llanmoor and many others. Such recommendations attest to our commitment to excellent service. With over twenty years in practice, we have a wealth of knowledge available to advise clients on their endeavours.
