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Buying a New House

The vast majority (over 80 per cent) of people in the UK live in houses rather than apartments – most people don’t like apartment living and want their own detached home with a garden and garage. They prefer more traditional styles and most aren’t keen on the more modern, high-tech homes favoured by some developers. Houses are also generally better value than apartments and a better investment. However, a major factor may be the size, as homes are getting smaller (particularly apartments) and new homes are a third smaller than 80 years ago.

Some new homes have incredibly small rooms and a modern three or four-bedroom house can be smaller than a two-bedroom Victorian cottage!

After having decided to buy a house, your next decision will be whether to buy a new or an old home. The advantages of new homes include:

• Modern bathrooms, a fully-fitted modern kitchen, central heating, good insulation, modern facilities, low maintenance, good security and storage.

• No work to do and you can move in immediately.

• Fewer problems – new houses are generally maintenance-free and there are no costs or problems associated with renovation or modernisation.

• Lower running costs than old homes. Most new buildings use low maintenance materials and have good insulation and ventilation, providing lower heating bills and keeping homes cooler in summer.

• It’s often cheaper to buy a new home than modernise or renovate an old property, as the price is fixed (although you can haggle!), unlike the cost of renovation which can soar way beyond estimates.

• Easier to obtain a mortgage.

• Comes with a builder’s warranty against defects.

• Can usually be let immediately.

• Modern homes have good resale potential and are considered a good investment by most buyers.

• You cannot be gazumped!

The disadvantages of a new home include:

• Lacking the history, charm and character of an older building.

• Little individuality or exclusivity (all homes in a development may be exactly the same).

• Gardens lack mature plants and trees.

• Teething troubles.

• Slower capital growth than an old property (they lack ‘rarity’ value).

• Possible restrictive covenants.

• Unfinished development and communities without local shops and services.

• They’re usually smaller than old properties with lower ceilings, smaller rooms (some are tiny, made to look bigger by shortened beds and smaller furniture) and less sense of space.

• They may be impossible to expand.

• They rarely have a large garden or plot of land.

• You may need to buy off plan and run the risk of the developer going bust or the property being worth less than you’ve paid when you take possession – although it’s more likely to be worth more!

Quality of Construction

The quality of new buildings in the UK is strictly regulated and they must conform to stringent building regulations and energy efficiency standards. However, the quality of new homes is extremely variable and some developments, e.g. apartments in major cities sold off plan, suffer from poor quality. Many developments in London and other cities are built for the investment (letting) market and aren’t suitable for owner-occupiers. Your best insurance when buying a new house is the reputation of the builder and it pays to buy from a long-established builder with a reputation for quality. The price may be marginally higher than buying from a builder who uses ‘cowboy’ contractors and refuses to honour his warranty, but it will be well worthwhile in the long term. Before buying a new home you should check what other developments the builder or developer has completed recently, make an inspection visit and ask owners what problems they have experienced.

Developers generally employ high standards of materials and workmanship and homes have higher specifications than old houses, including double or triple-glazing, cavity and under-floor insulation, and central heating. Luxury ‘intelligent’ homes have discreet systems that allow you to control the temperature, lighting, security, music and TVs via wall-mounted or remote controls. They may also have broadband (internet) connections in all rooms. Some developers also offer specially-designed live-work homes for those who work from home.

New homes often contain a high level of ‘luxury’ features, depending on individual developments and (of course) the price. Executive homes with four or five bedrooms should have three or four en suite bathrooms with separate showers; built-in wardrobes in all bedrooms; three reception rooms; a double integral garage; solid oak doors; designer kitchens with top quality appliances; ceramic floors in kitchens, bathrooms and cloakrooms; a security system; conservatory; kitchen/breakfast room; utility room and possibly a cellar. You can also have a variety of ‘custom’ extras included at additional cost such as additional power points, upgraded kitchen appliances, special flooring and wall tiling, a conservatory, a hot tub or Jacuzzi, landscaping, special lighting and a wide variety of electronic gadgets. An added advantage is that the cost of extras can be included in your mortgage, although it’s important to check that they offer good value for money (many developers overcharge on extras, which is a common cause of complaints).

Construction Methods

Most new homes are made of brick (some 10 per cent in England and Wales are of timber frame construction) and some employ steel-framed panels, a recent introduction to the UK, but used widely in Australia and the USA. Frames are pre-fabricated with foam insulation board ready for bolting together, which increases fuel efficiency and sound insulation. Although rare, stone (usually from a local source) is again in vogue as a building material for new homes. Homes with thatched roofs have always been popular and specialist builders offer ‘thatched’ homes of almost any size.

Choice

A huge variety of new properties are available, including apartment and townhouse developments – some of which are conversions of old buildings, although for all intents and purposes these qualify as new homes – standard family homes built on new estates, and a wide range of individually designed detached houses (including vast mansions). Waterside homes are popular and many new harbour developments have been built in recent years. Although rare, golf properties are in demand and may include a year’s free membership of a golf club. In some areas, new homes must be styled to blend in with existing homes and many builders offer a number of ‘mock’ period styles, possibly using recycled materials (e.g. bricks, tiles, oak timber beams, fireplaces, doors, etc.) from old properties, thus offering the best of both worlds for those who cannot decide between a period home and a maintenance-free new home. Some developers even create new houses in the style of barn conversions to keep up with demand.

Purpose-built Developments

Many new homes are part of purpose-built developments, which offer a range of sports facilities such as a golf course, swimming pool, tennis and squash courts, a gymnasium or fitness club, and even a bar and restaurant. Some properties built on private estates have a resident’s association or management committee to manage the upkeep of roads, landscaping, trees, plants, lighting, and so on, for which owners pay an annual fee. There are usually also a number of restrictive covenants that owners must adhere to. The cost of land is usually included when buying a detached house on its own plot, unless you agree a separate contract for the land and the house. Most new homes are sold directly by property developers or builders, although they may also be marketed by estate agents (generally there’s no difference in price, although the developer will have more flexibility on prices). New developments have a sales office and usually a show house or apartment (which may be larger than standard, so don’t assume that the one you want is the same size). Homes built within private estates or grounds often have excellent security, including electronic gates, security lights and alarms linked to a central monitoring station (and are a good choice for those seeking maximum privacy).

Warranty

Most new properties are covered by the National House Building Council’s (NHBC, 0845-845 6422, www.nhbc.co.uk), Buildmark 10-year warranty or the Zurich Municipal Building Guarantee (01252-522000). Most lenders will refuse to lend against a new house without a warranty. The NHBC warranty covers the owner for claims of up to £10,000 against the builder’s failure to complete the house, for the loss of a deposit (up to 10 per cent of the agreed price) or any expenses incurred in completing building work.

Buying new isn’t all roses and it isn’t unusual for new homes to have hundreds of (mostly minor) faults.

During the first two years the builder should make good any defects – termed ‘snagging’ – arising from his failure to meet NHBC requirements. During the first two years in a new home you MUST list all the things that require fixing that are the responsibility of the builder and make sure that they are put right. Several websites (such as www.snagging.org) offer snagging ‘lists’ to use as a guide. Alternatively you can hire a professional to do the snagging for you, which is highly advisable as they know what to look for, have more leverage and will reduce the stress. It’s best to hire a chartered surveyor (at a cost of £150 to £300 depending on the number of rooms) or you can use a company such as Inspector Home (0845-051 1015, : www.thesnaggingprofessionals.co.uk) or New Build Inspections (0845-2266 486, www.newbuildinspections.com). If you use a company, make sure that they are qualified and that you receive a quotation. If you fail to register a defect within the two-year period you have no claim unless it comes under ‘major structural damage’.

The NHBC warranty (which is half funded by developers) has been accused of being toothless when it comes to getting ‘minor’ faults rectified and the NHBC is slow to act and soft on builders (the building trade enjoys the luxury of self-regulation).

During the next eight years you’re only insured against major structural damage caused by defects in the structure, subsidence or heave. If you find or suspect any building defects within the first two years, you should inform the NHBC in writing and have a survey done to ensure that your property is sound. The Zurich Municipal Building Guarantee provides a similar 10-year warranty, including protection against a builder going bust before a property is completed.

Buying Off Plan

When buying a new property in a development, you’re usually obliged to buy it off plan, i.e. before it’s built.

If a development is finished and largely unsold, particularly in a popular area, you should beware as it usually means that there’s something wrong with it that the locals know about!

In recent years people have queued overnight to buy properties in many new developments. In a rising market it’s possible to make a good profit buying off plan and selling before completion a year or two later (termed back-to-back sales), thus making a profit without actually buying the property.

The contract will contain the timetable for the property’s completion; payment dates; the completion date and penalties for non-completion; guarantees for building work; and a copy of the plans and drawings. Payments are spread over the period of construction, with payments made in stages as building work progresses. If you’re buying a property off plan, you may be able to choose your bathroom suite(s), kitchen cupboards, wallpaper and paint, wall and floor tiles, and carpets, which may be included in the price. You may also be able to alter the interior room layout, although this will usually increase the price.

Some analysts advise buyers against buying off plan, which can be risky, particularly in a falling market. It may be better to wait until a property is almost complete before buying, otherwise you could end up paying more than a property is worth or the developer could even go bust (it all depends on which way prices are heading). You must put down at least 10 per cent of the price as a deposit and pay over £500 in legal fees to exchange contracts, which legally obliges you to go through with the purchase. If the developer goes bust, you may have to wait years for a property to be completed and there’s no guarantee that it will be finished to the original specifications. Added to which you could lose your loan if bad publicity has an adverse effect on the market value of the property. In 2003, many buyers pulled out of off-plan purchases (and lost their deposits), particularly in London, amid fears that the property wouldn’t be worth what they had agreed to pay and that the rent wouldn’t cover their mortgage payments. When buying off plan, choose a large developer or one who’s selling different types of property in different areas, as he’s better placed to weather a storm.

Price

Whether you can haggle over the price of a new home will depend on demand and how fast they’re selling. In a rising market a development may sell within a few days of being released for sale, with the majority of properties being snapped up by investors. If a development isn’t selling well (as in London in autumn 2004), the developer is usually willing to haggle over the price or include ‘extras’ (such as a garage or parking space) free of charge. Some developers will also pay your deposit (or offer cashback), stamp duty and legal fees to clinch a sale. One developer even offered to pay commuter travel costs to London! Whatever the state of the market it’s always worth trying to reduce the price. In 2004, shrewd buyers were getting discounts of up to 15 per cent on selected apartments in London and developers were slashing the price of their most expensive homes by as much as 25 per cent in a bid to attract buyers.

Part-exchange

Some developers offer a part-exchange deal on your existing home, although you should be wary of such schemes. Part-exchange is a lucrative business for developers and also saves vendors the hassle of selling their home and paying agents’ and other fees. Many developers offer a part-exchange deal when you’re buying a more expensive new home – usually the property you’re buying must be worth 30 per cent more than the one you’re offering in part-exchange.

Resale ‘New’ Homes

Buying new doesn’t necessarily mean buying a brand new home where you’re the first occupant. There are many advantages in buying a modern resale home, which may include the following:

• Better value for money;

• An established development with a range of local shops, services and facilities in place;

• The eradication of teething troubles;

• Furniture and other extras included in the price;

• A mature garden and trees;

• A range of improvements made by the owner;

• The ability to assess the overall quality of a development, the neighbourhood and check on your neighbours.

With a resale property you can see exactly what you will get for your money, most problems will have been resolved, and the previous owner may have made improvements such as an extension, which may not be fully reflected in the asking price.

The disadvantages of buying a resale home depend on its age and how well it has been maintained, and may include:

• A poor state of repair and the need for refurbishment;

• Lacking the benefits of a new home unless it has been modernised;

• The need for redecorating and new carpets;

• Poorer build quality and inferior design;

• No warranty;

• Woodworm or other infestations;

• The possibility of incurring high assessments for repairs in leasehold properties.

Home and property magazines contain a wealth of information about new homes, including a list of new developments throughout the country, and numerous advertisements from builders and developers. Daily newspapers are a good source of information, particularly the quality Saturday and Sunday newspapers such as The Times and The Telegraph (Saturday editions), and The Sunday Times and The Sunday Telegraph. Many home and property exhibitions are held throughout the UK, including the Daily Mail Ideal Home Show, staged in March at the Earls Court Exhibition Centre (London), the biggest and best of all, the House & Garden Fair (held in June at the Olympia Exhibition Centre, London) and the Evening Standard Homebuyer Show (www.homebuyer.co.uk). You can also search for a new home on the internet with Your New Home (www.yournewhome.co.uk), new-homes.co.uk (www.new-homes.co.uk) and Smart New Homes (www.smartnewhomes.co.uk).

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