6 Top Questions If You’re Buying A New Build Home
Buying a new build home is not dissimilar to buying any other property however, the process of buying a new build house comes with its own issues. Here are some specific questions you should ask if you are buying a brand new home direct from the developer.
1. Is It Leasehold or Freehold?
If a house is Leasehold, it means that you have a lease from the freeholder to use the home for a certain number of years, usually long term – often 90 – 120 years and as occasionally as high as 999 years.
There are sometimes conditions attached to a leasehold property. There could be restrictions obtaining consent for alterations, extensions, sub-letting and owning pets. Most are very reasonable.
If you buy a leasehold property, you may be responsible for paying maintenance, buildings insurance and an annual ground rent. Although ground rent may be nominal, it can escalate quickly (doubling every 10 years) and make your home difficult to sell on.
If you buy a new build flat you will have to buy it on a leasehold basis. You need to ask the developer and your conveyancing solicitor to explain the terms of the lease, its restrictions and what charges apply now and in the future years.
If you are planning to buy a new build home, you are no doubt aware of the leasehold scandal. New built houses should not be sold as leasehold. Campaigning in this area has led to the Government banning the sale of new houses as leasehold and for new ground rents on all leasehold properties to be set to zero. This proposal has not yet come into law. Meanwhile, houses sold as leasehold are sold with high ground rents that can double every 10 years and onerous fees. Many buyers of leasehold properties have found that their freeholds have been sold to investors who are now asking for hugely inflated sums (£40,000!) to sell them the freehold to their homes. Properties cannot be sold as prospective buyers will likely be refused a mortgage. Beware.
2. What Is A Maintenance Contract?
Before you begin the process of buying a new build house ask if there is a service charge to look after communal outdoor areas. If so, you will be charged a maintenance fee, usually payable annually and you can find out what this charge is likely to be in advance. The charge will be bound to your property through your title deeds.
Homeowners on private estates will pay the charge which will be itemised for services the company has paid for.
There is no legal right to refute and you cannot withstand payment if you are dissatisfied.
3. Conveyancing For A New Build Property
New build conveyancing can be complex because it is often necessary to examine many different legal documents and agreements in order to understand the law surrounding issues such as plot purchases and planning permission and the issues surrounding transferring the deeds into your name.
Mortgage lenders often insist on a specialist lawyer completing the process on the buyer’s behalf because of this. If any part of the process is misunderstood, it could mean legal disputes and, in the worst case scenario, your loss of the property. Many developers will have a recommended Conveyancer that they prefer to work with. But you are not obliged to use them and you should certainly compare conveyancing costs before appointing a solicitor.
During the process of buying a new build house, your Conveyancer will:
- Check the title deeds for the property
- Make sure everything is as it should be with the property and the paperwork
- Communicate with the developer regarding planning permissions and other constructions on the development such as drains and sewers
- Discuss with you the ‘new build guarantee’ and explain how this will protect your interests
- Discuss with you the terms of the contract for the property you are purchasing
The process differs because:
- The developer will have a large number of sales progressing at the same
- They may adopt a slightly different conveyancing process than normal, one that suits the needs of the construction companies
- It is the sale of part. As the developer usually owns the whole site, they will be disposing of it bit by bit
4. What Is The NHBC 10 Year Warranty Compared To Developer Warranty
The National House Building Council, usually known as the NHBC, sets out to raise the construction standards of new homes in the UK, providing consumer protection for homebuyers through its 10-year Buildmark warranty. NHBC offers warranties for newly built/converted private homes and mortgage lenders will usually require that a warranty is in place before lending on a newly built property.
The NHBC warranty for private properties is split into two parts:
Your new home comes with a 10 year structural warranty, repairs of any damage caused by faults in specified parts of the home, usually the structural and weatherproofing elements is covered.
During the first two years, you have the added reassurance that if something goes wrong within your home, and is covered by the 2 year fixtures and fittings warranty, it will be put right.
5. Are There Limitations On External Improvements/Extensions
Are you thinking of extending your new build home? Are you thinking of a conservatory or a double-storey extension. If so, you should always seek advice from a qualified structural engineer, building surveyor or architect. But just as importantly, you must refer to your title deeds or lease and check for any limitations. You can find out in advance from your conveyancer if there are any limitations implemented.
Any alterations or extensions to your home will not be covered by NHBC’s Buildmark policy; neither will any damage to your home caused by the work undertaken.
6. Do I Have A Dedicated Parking Space
Restrictions on building parking spaces for new properties mean they have become a desirable commodity. In many cases, developers were found to impose controls even within new build developments, only allowing buyers of large or expensive properties to purchase a parking bay. Where parking spaces cannot be purchased, some developers offer annual permits to rent out parking bays.
In many developments properties are allocated parking spaces proportionate to their size… a two-bed house might have one parking space, a four-bed, two and so on.
The problem with allocated parking is that it is a standardised metric can’t respond to the fact that not every three or four bed is going to need two spaces. Some might need less, some might want more.
Clearly, allocated parking does not accommodate the significant variations in car ownership and need that will commonly be found on any housing development. Nor does it accommodate variations in time. It’s just the luck of the draw, unless you are able to request such specifications before completion.
Many new build homes have parking built into the plot spec or a garage. Always check the site and plot specification with the developer’s sales office.
Buying a brand new home can be very exciting. No one else will have lived in your home and you are likely to have control over decisions on internal specifications.