What Is A New Build Property?

Choosing a new build property can be an appealing option for many homebuyers. The allure of a brand-new home constructed with modern ecological standards and the prospect of minimal maintenance can be quite compelling.

However, new builds may not suit everyone’s preferences and circumstances. In this guide, we’ll take you through what constitutes a new build property, the benefits and drawbacks of choosing one, the deposit requirements, the exchange process, and how to navigate the journey successfully.

Defining a New Build

A new build property is broadly defined as a property that has been built, converted, or refurbished within the last 2 years. However, the point at which a property stops being considered a new build can be subject to varying interpretations.

Some argue that a property loses its “new build” status once it has been lived in, while others consider it a matter of time since construction completion. It’s important to clarify this definition when evaluating new build options.

The Exciting Option of Buying Off Plan

Buying off plan is an option where you can purchase a house that is still in the process of being built, or even a property that doesn’t physically exist yet. While this might sound like a risky endeavour, there are potential benefits.

Buyers who opt for off-plan purchases can sometimes secure advantages like free upgrades, the ability to choose the best plot, and even negotiate discounts on the property’s price.

The Pros and Cons of New Build Properties

As with any significant decision, new builds come with both positive aspects and challenges. Here’s a breakdown of some common pros and cons associated with new build properties:

Pros:

10-year warranty provides peace of mind.
No chain from the seller, which can streamline the buying process.
Energy-efficient features are integrated into the property’s design.
Property has never been occupied before, offering a fresh start.
Expected lower maintenance costs due to new construction.

Cons:

New builds often come with a higher price tag.
Estate management charges might be applicable.
Quality issues and snags can arise during construction.
Delays in construction could impact your moving timeline.
A commitment to exchange within 28 days of purchase.

Written in August 2023 by:

Sam Chester

Deposit Requirements for New Build Properties

Lenders typically ask for a larger deposit when financing a new build property. This precaution is due to the common occurrence of new builds losing value initially before aligning with the market value. Here’s a general outline of what most lenders might require:

New build house: 10% deposit.
New build flat: 15% deposit.

Flats, being perceived as riskier, often necessitate a higher deposit. However, lenders have varying criteria for flats, so it’s wise to consult with a broker to determine whether the flat you’re considering aligns with their requirements.

Navigating the Exchange Process

When you exchange on a new build property, you become legally committed to the purchase, and the builder is bound to sell the property to you. This typically must be completed within 28 days of the purchase agreement.

While it’s crucial to engage in the exchange process, we strongly advise against proceeding without a mortgage offer. In case you withdraw after exchanging, you could face penalties and financial losses.

Choosing Your Partners and Staying in Control

While builders and their agents may encourage you to use their recommended mortgage brokers and solicitors, remember that it’s your choice. You have the freedom to select your preferred professionals for these roles.

Builders often have targets to meet, and the new build process is progress driven. Be prepared for potential pressure, but also know that you have the right to direct communications through your chosen experts.

Working with Mortgage Brokers for a Smooth Experience

Experienced mortgage brokers have navigated various new build developments and understand how to work effectively with builders. If you prefer not to directly communicate with the builder or agent, your broker can handle the communications. By collaborating with professionals who have expertise in the new build process, you can confidently pursue your dream home while ensuring a smooth and informed journey.

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Attention Please!!!

The content within this article is as accurate as the date it was written. To ensure the most up to date information, you should consult with one of the experts that we work with as every lender and their polices are different and can be changed or amended without notice.

This website is for information only and does not constitute financial advice. Our mortgage advisers are all fully qualified to provide mortgage advice in accordance with the Financial Conduct Authority (FCA) regulations. We only exclusively operate with businesses that are authorised and regulated by the FCA. All advice offered will be unique to your individual circumstances.

Some Buy to Let mortgages are not regulated by the FCA. You should carefully consider securing other debts against your home. If you do not keep up your mortgage repayments, your home may be repossessed. Equity released from your home will also be secured against it.