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Buying a new-build home

Discover the pros and cons of buying a new-build home and follow our step-by-step guide on the process.

In this article
New-build mortgages Leasehold new-build properties Pros and cons of buying new-build homes How to buy a new-build home: step-by-step guide
Conducting a snagging survey on a new-build home Schemes to help with buying new-build homes Using part exchange to buy new-build homes

To try and tackle the national shortage of property, the government is placing a big focus on new-build homes at the moment, pledging to build one million more in the next five years.

The government is heavily incentivising buying new-build homes, too - you can buy a new home with a deposit of just 5% using the Help to Buy equity loan scheme.

However, there are some disadvantages to buying new-build homes, including the fact that it can sometimes be more difficult to get a mortgage. 

Here we explain the pros and cons of buying a new-build home. 

Looking for a new-build mortgage?

Which? Mortgage Advisers can find and arrange the best deal for you.

Your home may be repossessed if you do not keep up your mortgage repayments.


New-build mortgages

Getting a mortgage for a new-build home can sometimes be harder than for an older property, as some lenders put stricter limits on the maximum value of a property on which they'll offer a loan. 

This means you might be restricted to borrowing 85% of the value of a house, or 75% on a flat, while lenders may be willing to loan a bigger percentage on an older property.

Timing can also be an issue. Mortgage offers tend to be valid for six months, which can cause a problem if you're buying a home that hasn't been built yet (see buying off-plan) and the completion date is further in the future. Some lenders will consider extending their offers, but this is often subject to reassessing your application. 

A few lenders make mortgage offers for new-build homes that last for longer periods, but these are by no means the norm. An impartial mortgage broker will be able to advise you on this - you can call Which? Mortgage Advisers on 0808 252 7987 for a free, no-obligation consultation if you'd like some help.

Leasehold new-build properties

If you're buying a flat, it's normal for it to be sold on a leasehold basis - this means that you own the dwelling but not the land it stands on.

However, in recent years, increasing numbers of new-build houses are also being sold as leaseholds. 

Owning a leasehold property will normally involve paying a ground rent to your freeholder. If you're in a flat, you'll also pay a service charge for the cost of maintaining the common parts of the building and grounds.

If you're buying a new-build leasehold property, it's important to check that your lease doesn't include a ground rent doubling clause, which involves the ground rent doubling every decade. The presence of this clause has led many new-build homeowners to become stuck in unsellable properties, as increasing numbers of mortgage lenders are refusing to lend on homes with this in their leases. 

Whether you're buying a leasehold house or a flat, it's worth discussing this with your solicitor and ensuring that the lease is free of such punitive clauses.

Find out more: leasehold and freehold advice guide

Pros and cons of buying new-build homes

Advantages of buying new-build homes Disadvantages of buying new-build homes
Guarantees: new-build homes come with a 10-year NHBC warranty covering structural defects. Most developers also provide their own two-year warranty. Delays: if there's a hold-up during construction, your mortgage offer could expire.
Specification: new homes are built to the latest specifications, so major repairs should be unnecessary for the first few years. They tend to be more energy-efficient, too, so you could benefit from lower utility bills. Defects: not all problems will show up in a snagging survey, and some developers have come under fire for poor after-sales service.
Personalisation: if you buy off-plan, you might be able to choose your fixtures and finishes. This is great if you're attracted by the 'blank canvas' element of buying new-build. Risk: plans and brochures don't always give a clear idea of what the home will actually look like when it's built.
Incentives: the government's Help to Buy equity loan scheme and Starter Homes Initiative are only available on new homes. Size: the rooms in new-build homes are often smaller than those in older properties, so you'll need to make sure your belongings will fit.
Ease of purchase: there's no upward chain to contend with when you buy a new-build home. Disruption: if you're one of the first to move in, you could find yourself living on a building site while the rest of the work is completed.

How to buy a new-build home: step-by-step guide

  • Find a suitable development. Research the area, the local amenities and the developer's track record.  
  • Seek guidance from a mortgage adviser about how much you might be able to borrow.
  • Visit the show home or marketing suite and choose a property. Pay a reservation fee.
  • Employ a conveyancer to deal with the legal side of your house purchase.
  • Exchange contracts and pay your deposit.
  • Before you move in, arrange to have a snagging survey conducted (see below).
  • Get ready for both the short stop date (when the developer expects to finish work) and long stop date (the date the home has to be completed by).

Conducting a snagging survey on a new-build home

Before moving into your new home, you should get a snagging survey done to identify any problems. 

A snagging survey will outline different types of defects, from bad water pressure to dodgy fixtures. 

You can conduct a snagging survey yourself, but given the amount of money at stake when buying a home, we'd recommend getting it done professionally.

Having said that, some defects might not come to light until you move in. During the first few months, it's useful to keep a list of any issues that arise and stay in regular contact with the developer. 

  • If you need help dealing with problems in a new-build home, you can find out where you stand by checking out our guide on the Which? Consumer Rights website.

Schemes to help with buying new-build homes

Around 145,000 new homes have been bought so far using the government's Help to Buy equity loan and London Help to Buy schemes, which apply exclusively to new-build homes.

Alternatively, if you can't afford to buy a house outright it might be worth looking in to shared ownership, which allows you to buy part of a home and pay rent on the rest.

Using part exchange to buy new-build homes

Some house builders run part-exchange (PX) schemes, which allow buyers to purchase a new-build home and use their current property as part payment. 

While part-exchange schemes remove the hassle of selling your home the traditional way, there are disadvantages. 

Some developers will offer below the market value, so you should always have your own valuations done by local estate agents before agreeing to anything.

Also, the eligibility criteria can be strict - sometimes you'll only be able to use part exchange to fund up to 70% of the purchase price of your new home. For example, if the developer offered £200,000 off the asking price in return for your current property, the price of the new-build home you were buying would need to be at least £285,000.

Find out more: our guide will help you answer the question, how much is my house worth?

Correct as of date of publication.



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