There are lots of reasons to buy a new build property. You can personalise it as it’s being built, arrange your move more simply with no chain and you should be able to trust that everything inside is new and in good condition.
However, just as with buying a pre-owned home, there are some questions you should ask when buying a new build. You also need to know the right person to ask, and what the answers mean.
Why are you recommending your solicitor/mortgage lender?
In a recent poll, over 40% of new build home buyers admitted they used the solicitor suggested by their developer/sales agent. These
referrals are designed to make them money, not to help you save money or time.
You may decide to go with a recommended solicitor or mortgage lender, but choosing one given by your developer will not necessarily save you time or get you the best deal. Choose your services by researching,
comparing and choosing a deal that’s right for you.
Is this leasehold or freehold?
Often in England and Wales we expect flats to be leasehold and houses to be freehold. But there’s been a
spate of issues with new build developments when it comes to freehold ownership. Do not assume that your property is freehold.
Find out for sure, and make sure your solicitor gets all the answers. Being stuck in a leasehold property when you’re not expecting it can mean extra charges, limitations on work or changes to the property and trouble when you come to sell down the line.
Who owns my freehold?
Don’t assume that the developer retained your freehold – in some cases they can be sold off in bulk to another agency. How does this affect you? Well, your freehold owner can decide how much your service charge is. In some cases last year, freeholders decided that service charges would double annually, making the properties painfully expensive and difficult to sell.
Freeholders can also limit you from making any changes to your property (including changing the flooring, putting in double glazing or a new front door) or charge you for their permission to do so.
Can I buy my freehold?
In some cases the option to buy freehold is available. With new build flats there is often a first right of refusal – as the owner of the leasehold, if the developer sells your freehold, you have to be offered it first. The danger if you don’t have this clause (or if you couldn’t afford to pay a lump sum on top of the money you’re already paying for a new home) can be that you have no idea who will buy your freehold and have a fair amount of control over how you live in your property.
Freeholders can not only make life expensive with service charges, ground rents and maintenance costs, but if they decide you can’t have a pet, they have more power than you.
If you are told you can buy your freehold, always get a price in writing. There have been cases where an affordable freehold deal becomes much more expensive later on, and leaseholders have no option – either pay it or it will be sold elsewhere.
Who do I contact if something is wrong with the property?
Often new build houses need a little time to ‘settle’. You’re usually advised not to hang things on the walls for at least a year, and sometimes not heeding this advice could invalidate your warranty.
Find out exactly who you would talk to (a name and contact details) if there are issues with your new build property, and what the channel is to register a snagging list upon moving in.
Ask what happens with your warranty if you get a private workman in to fix something, and how long the warranty lasts for, as well as what it covers. When new build developments are complete, you’re not likely to go through the developer, and the people you know may move on, so make sure you have a clear chain of access.
What other costs come with my lease?
Service charges, ground rents, maintenance costs…if you’re not expecting these charges and you haven’t accounted for them, they can make quite a dent. Find out what these costs are, how you pay them and when. Also be sure to check what the rules are around changing or increasing these costs.
If arranged with the landlord you may also pay into a ‘reserve’ or ‘sinking fund’ which is designed to build up a pot of money for future repairs or maintenance. This can be taken as part of the service charge and means there’ll be no large upfront payment if works are necessary. You cannot withdraw money from the sinking fund if you move before works are done.
Have a look to see if there are event fees or exit fees attached to your lease – making changes to your living situation, like moving in a partner. Make sure you know whether these exist in advance.
What changes can I make?
It’s worth checking what limitations are placed on the leaseholder by the freeholder before you buy the property. With some new build properties you may be surprised to find you cannot make changes to your home in the way you might if you owned the freehold. Replacing flooring, doing building work or even painting the walls may be restricted in your contract.
This depends on whether or not structural or non-structural alternations are prohibited in the contract. You may be able to make these changes but will need permission from your freeholder (and they may be able to charge you for this permission).
Subletting the property might be restricted, as well as having pets. Be sure to fully inspect your contract with the help of a solicitor and make it clear if any restrictions are not acceptable to you.