New build top tips
Buying a new build home is a great option for many people, whether you have a growing family or you’re right-sizing in your later years. Even for first-time buyers, a newly-built house can seem like a less stressful option since you are able to move straight in.
But, it’s incredibly important to be careful when buying a new build, as there are many things that may come back to haunt you if you don’t check them earlier on. Here are our top tips:
1) Make sure the plan of the property is correct
Always check that the plan has a scale, north point and is based on the surrounding Ordnance Survey detail, otherwise it is likely to be rejected by Land Registry.
Plans can be a major problem if they are wrong, so it is importance to look at it carefully and make sure it is the same as the property on the ground.
Compare the plan with the developer’s Land Registry Title Plan.
If your plot is on the edge of a development, this is especially important; find out who’s going to be responsible for maintenance of boundaries.
2) Check the price and any extras
Believe it or not, there can actually be a lot of confusion about exactly how much you are paying for the property, especially if the developer has offered you incentives or if you have negotiated to pay for extras.
Usually, the developer will expect you to pay for the extras up front, but DO NOT do this until contracts have been exchanged, otherwise you may have great difficulty in getting your money back if the developer feels you have broken faith with them if you don’t proceed to purchase.
3) Ground Rent, Service Charges and hidden costs
Always check the detail around the payment of ground rent, service charges and any other payments you will be required to make once you purchase the property.
On new developments, it’s not just leasehold properties than can incur service charges; developers often insist that owners pay towards cleaning, maintenance and repairs of common parts or particular features on the development.
Above all, never complete your purchase until you are clear about the payments you’ll need to make following completion.
It is particularly important to look at any list of fees which can be charged for providing information or for late payments and also when you want to sell the property; some of these fees tend to put buyers off, which may make it more difficult for you to sell the property in the future.
4) New build guarantee or architect’s certificate?
All new build properties should come with either a 10-year new build guarantee from a reputable and recognised guarantee provider for these types of properties, such as the National House Builders Council Guarantee (NHBC) or an Architect’s Certificate.
Be sure to check the UK Finance Mortgage Lenders’ handbook to see whether your mortgage lender will accept the 10 year guarantee being offered.
Remember, an Architect’s Certificate is NOT a guarantee. If you wanted to make a claim under an Architect’s Certificate, you would have to start by proving that the statement was inaccurate in some way.
In order to be accepted by Mortgage Lenders’, the Architect Certificate must be in the form of words at Appendix 1 of the UK Finance Mortgage Lenders’ Handbook with a copy of the Architect’s current Indemnity Insurance schedule.
5) The Snagging List
Normally, you will be invited to view the property a matter of days before completion to make sure everything is working and that you are happy with the finishing touches of the building. Often, there can be things which need to be finished off, such as lawns to be seeded or turfed, fencing to be erected, etc. These things can be agreed with the site office.
Sometimes, there are physical defects which need to be addressed e.g. door handles missing, double glazing units have failed, inappropriate colours or finishes. Similarly, these aspects can usually be sorted out by talking to the site office, rather than solicitors.
If there are any significant defects or deviations from the sales brochure or the paperwork provided by solicitors, you should contact your solicitor immediately to explain the issues and agree a way forward.
6) It’s not all over once you’ve got the keys
People often think that the job is done when they’ve got their keys. This is far from the truth. The Land Registry spends many months completing the registration of your title and, in the meantime, your solicitor should arrange payment of stamp duty land tax, register you for the new home warranty and liaise with the developer’s solicitors to ensure that any charge or restriction has been discharged or complied with.
Make sure that you do get a copy of the Title Information Document from the Land Registry and a copy of any documents referred to.
You should pay particular notice to the Land Registry file plan and make sure that it matches with the property on the ground; the Land Registry will often exclude land if it wasn’t in the developer’s title in the first place.
7) Are searches on a new build really necessary?
Simply put, yes!
The searches that solicitors do are actually even more important for a new build property.
The local search shows all planning permission and building regulation approvals for the subject property but not properties in the surrounding area.
It is particularly important to check with the developer that all planning conditions have been complied with and to see the Building Regulation Completion Certificate which proves the property has been built in compliance with Building Regulations.
A mining search will reveal whether there are any shafts and adits within 20 metres of the property.
An environmental search highlights whether previous use of the land is likely to have caused contamination.
There is also usually a section showing what the likelihood is of flooding at the property in the future.
8) Rights and Covenants
You should ask your solicitor to talk you through the rights being granted with the property and any rights being reserved.
You will want to know about your rights and the rights of others; they should all be shown on the plan, usually by colouring or hatching.
Read through all the covenants and regulations- these are often listed in the Transfer or Lease and make sure you will be able to follow all these rules. The developers include these in order to keep the whole estate pleasant for all residents.
9) Roads and Sewers - who is responsible?
Developers are not obliged to construct the roads and sewers on a new development, so it is very important to check that legal agreements have been put in place to force the developer to make up the road and sewers.
You can even negotiate holding back some of the money, which will only get paid to the developer once the roads/sewers have been built and signed off.
10) When will it be ready?
When you are buying ‘off-plan’, all you can usually see when you agree to buy the property is a patch of grass or just soil. The developer’s sales office may have shown you an artist’s impression of what your house will look like and perhaps even shown you around a ‘show home’.
If money is tight or other factors intervene, it could take a long time for developers to finish the job. Anyway, it’s common knowledge that it’s almost impossible to get a builder to commit to a date!
So, to avoid getting your hopes up and later shattered, make sure there is a longstop date for completion of the property in the sale contract. This means that if the property isn’t complete by a particular date, you are allowed to withdraw your offer without incurring a penalty.
You should get a solicitor to advise on any get-out clauses or conditions which would allow the completion date to slip even further.