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Buying new build - Camilla Dell, Black Brick Property Solutions

Buying new build property

Camilla Dell provides essential advice for buying new build property.

There is no doubt that 2009 was a tough year for the new build market, but there are still many quality developments to be found. In some respects, the economic downturn has sorted the wheat from the chaff - those who have survived tend to have a good quality product, a good reputation, and a stable financial position.

When buying new build, there are several things to bear in mind, over and above the usual considerations.

Track record

As we are still operating in a rather delicate economy, it is essential that you do your research and find out as much as possible about the developer. Look at their portfolio of previous developments, and search for any feedback online. If you can, find out whether they are in good financial shape - you do not want to buy from a developer who is about to go bust. On the other hand, if you want to take a risk, then a weak financial position can be used to negotiate hard on price.

The real deal

Buying new build property can often mean you are buying off plan. The home you buy may not be completed, or construction may not have even started, so it can be a nerve-wracking experience paying good money for something you haven’t actually seen.

If you are dependent on bank finance, there is always a risk, especially in an uncertain market, that on completion the value of the property you buy will be less than the original agreed price. If this happens, the bank will only lend to you based on the current completion value, which may mean having to inject more equity. To avoid this, see if it is possible to make an agreement with the developer dictating that, should the property’s value be less at completion than the original price, a re-negotiation can take place.

There are other risk factors to bear in mind – delayed completion and substandard quality of finish are two. It is best to employ an independent solicitor to negotiate some protection into the contract for you, to prevent these problems incurring further costs. Never be tempted to use the ‘on-site’ solicitor, no matter how cheap they are.

Positioning within the building is also important – check the site plan carefully and enquire if there is going to be any further development taking place on the site. You don’t want to be in the position of buying in a building where the view is fantastic, only to then discover post purchase that another building is going to be constructed directly in front of you.

Think ahead

As with any property purchase, giving some thought to the future resale value is important. The issue with new builds is that there is likely to be a large number of identical properties besides your own, so you will not be able to capitalise on the ‘uniqueness’ factor. However, there are ways of minimising this disadvantage.

As a rule, buying in a small development of, say, 15 units rather than 115, will increase your chance of a good resale price. Not only will there be fewer identical properties, but there will also be less chance of another property in the same development being on the market at the same time.

Finally, checking where the affordable housing element of a development is going to be is really important, as proximity to this may affect the resale value when you come to sell. It can also affect the initial price and provide grounds for negotiation.

Camilla Dell

Camilla Dell is Managing Partner of Black Brick Property Solutions LLP (www.black-brick.com) Black Brick is London’s leading independent buying consultancy, acting exclusively on behalf of buyers to source and secure the best property at the right price.

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