Guide to buying a new build house

What is a new build house?

A new build property is one that has recently been built and has not been lived in before. Around 40,000 new build properties were built last year. For many people they are an attractive prospect for their next home.

What are the benefits of buying a new build house?

There are several benefits to buying a new build house. Much of the appeal for potential buyers lies in the idea of having a brand-new home that is move-in ready and requires very little maintenance. Your new home should be covered by a 10-year National House Building Council (NHBC) guarantee. This means if any work does need to be done during that time, you shouldn’t need to cover the cost of repairs. Depending on when in the building process you purchase the property, you may also be able to have a say in the property specification and some key interior design elements.

A new build house is also likely to be more energy efficient than an older property. This could mean lower energy bills.

How to buy a new build house

If you’re considering buying a new build house, your first step should be to research whether there are currently any new build property developments in the area you would like to live. You can do this in-person by driving around the local area (they are usually well advertised), or online by searching for available homes on one of the big online property portals. Most will have an option to search for new build properties only.

You should also contact a financial advisor to assess what your property budget might be. If you require a mortgage to buy a property, you should get a mortgage in principle before you start the house hunting process. It is worth noting that mortgage lenders will often be willing to lend less on a new build house than on an older property (often up to 85% of the value of a new build property). Knowing how much you might be able to borrow in advance will avoid disappointment.

Once you’ve found a new build property, you will usually be required to pay a reservation fee. This fee is likely to be somewhere between £500 and £2,000 and is usually deducted from the property purchase price. It is worth noting, however, that this reservation fee is usually non-refundable and will be lost if you decide to pull out of the purchase for any reason. It is therefore important to ensure your finances are in place before reserving a property.

Once you’ve reserved the property, the legal process of buying a new build house is similar buying any other property. You will need to hire a conveyancing solicitor to handle the legal side of the sale. You will also need to apply for a mortgage in the usual way. It is advisable to get a property survey done, even with the NHBC 10-year guarantee.

How to negotiate buying a new build house

We speak to thousands of home buyers every year who are thinking about buying a new build house. Many of them aren’t sure how to negotiate on the price.

Lots of people assume that you can’t negotiate when buying a new build house, but that simply isn’t the case. In fact, often a developer is more open to negotiation than a normal homeowner.

To show what we mean, we analysed the sale prices of a fairly typical new build development in Nottingham built by Bellway Homes.

Only 10 of 26 similar properties in the development sold for the same price.

We can also see that properties were selling well below asking price, for example one had a guide price of 225,000 and sold for £200,995 and another was advertised at £399,995 and sold for £379,995.

This same picture will be found in every new housing development in the country. Just like the person sitting next to you on an aeroplane, you and your neighbour are unlikely to have paid the same price.

Top tips for negotiating on a new build house

  • The price is not fixed. Very few people pay full price when buying a new build house and you should not feel uncomfortable making an offer that is below asking price.
  • Put yourself in the best position you can before putting in an offer. The more proceedable you are, the greater your power to negotiate. If you have a property to sell before you can move, it should be under offer. If you require a mortgage to buy, you should have a mortgage in principle lined up. Ensure you make it very clear that you’re in a strong position and are a desirable buyer.
  • Do your research before you negotiate.
    • How long has the property been available?
    • How many properties do they currently have available?
    • Are there other similar properties available in the local area? If so, how much are they on the market for?
    • When is the builder’s financial year end? In the lead up to it they’ll be particularly keen to strike a deal for a sale that can complete before the deadline

Having the answers to these questions will strengthen your negotiating power and help you decide what price you’re happy to pay for the property.

  • Don’t rush in. Once you’ve viewed the property, go away and consider your options. Even if you have your heart set on a property, don’t give that away to the sales rep. Explain that you need to go away and consider your other options.
  • Timing is everything. Buying at the start of the development and the end of the development could save you the most money. At the start, developers will be looking to sell off-plan in order to guarantee sales and generate income to fund the development. At the end of the development, the developers will be keen to get the remaining homes sold so that they can eliminate the cost of having a sales office and sales staff on-site and move on to their next development.
  • Negotiate on extras. Even if you’re struggling to get the developers to move much on the price of the property, there are other areas where you can negotiate and make a saving. Extras such as carpets and curtains, cash-back deals to cover stamp duty or solicitors’ fees and even free upgrades on kitchen spec or white goods are all things you may be able to negotiate on when buying a new build house.
  • Your initial offer is just the start of negotiations. If the developer rejects your first offer, don’t lose heart. If you’re happy to up your offer, do so until you find a price both you and the developer can agree on.
  • What if you’re buying a shared ownership property? If you’re buying a shared ownership property, you may find that the developer seems less willing to negotiate on price. This being said, it is still down to a basic premise of supply and demand. If they need to sell the property and their options are limited, you may still be able to secure a good deal.
  • Stick to your guns. Negotiations can take days, don’t panic and immediately increase your offer. Trust in your research. If you don’t have much competition, you stand a good chance of getting a discount on the asking price.
  • Ensure you’re buying the property for the right reasons. Why are you buying this particular house? Is it the location, the property layout, the incentives available to help you buy it? A new build property won’t be ‘new’ forever. Will this still be the right property for you in a year or two when the novelty of it being a newly built home wears-off? Will the space in the property work for you long-term? Is this property the right one for you?

Is buying a new build house a good investment?

Whether you consider a new build property to be a good investment will depend on your personal circumstances. How long do you intend to own the property for?

If you’re buying a new build property expecting its value to increase, you may be disappointed. It is widely accepted that you will pay a premium for living in a brand-new house that no one has lived in before. A little like buying a brand-new car – the moment you drive it out of the showroom it loses some of its value because it is now ‘second hand’. Although the Royal Institute of Chartered Surveyors (RICS) assures would-be buyers that there is no fixed percentage that they would assume to be a new build premium, this article suggests that it could be as much as £65,000.

Ultimately, a property is only worth what someone is willing to pay for it. If you’re buying a new build property and planning to live in it for many years, you may be very happy to pay that new build premium. If, however, you’re unsure how long you plan to stay in the property, you should take the premium into consideration. Depending on the size of your deposit, it could push you into negative equity.

If you’re buying a new build house as a low maintenance buy-to-let property, you may consider it a good investment. You will know, in advance, that you can expect very few maintenance costs or decorating costs. Buying it as a buy-to-let investment also means you are likely to own the property long enough to build up a substantial amount of equity. You should consider, however, that some new build homes demand significant service charges. These should be factored into your ROI calculations.

If you’re buying the property as a first-time buyer, and the incentives offered on new build properties mean this is the only way for you to be able to afford a property, mortgage payments are likely to be a better investment than living in rental accommodation. The key in this scenario is how long you would intend to stay in the new build property. If you’re planning to stay long enough to repay a substantial portion of your mortgage, and you think the new build premium is a price worth paying to get a foot on the property ladder, it could be a good move for you. You should be aware, however, that if have an unforeseen change in circumstances and need to sell the property sooner than expected, you may find yourself in negative equity.

What questions should you ask when buying a new build house?

When you’re considering buying a new build property, your first questions will probably centre around property availability and price. However, it is important that you also consider the future of the development and what the local landscape may look like in the future.

Some possible questions might be:

How many phases of development will there be?

How many properties are planned for each stage?

What will the final development plan look like? Eg. where will any blocks of flats be positioned?

What plans are there for local amenities? Will the development include any local services such as shops, pharmacies or doctor’s surgeries? Is there any provision for green space or community space within the development plan?

How long does it take to buy a new build house and what is the process?

How long it takes to buy a new build house will depend on whether your property is ready to move into.

It currently takes 2-3 months for the legal process of buying a house, but it can take longer if you’re part of a property chain or if your new build house is not yet finished. If you’re buying ‘off-plan’, you’re likely to have to wait several months, or even longer, for your sale to complete. When discussing the completion of the build of your new home, you will hear the developer talk about ‘short-stop’ and ‘long-stop’ dates. The short-stop date is the date the developer expects the property to be finished. The long-stop date is the date that the property has to be finished by.

You can read more about the house buying process in our house sale completion guide.

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Danny Luke

Danny Luke

As Managing Director, Danny is responsible for the overall performance of Quick Move Now and provides strategic guidance and direction to all its employees. Danny is committed to making Quick Move Now the leading and most trusted home buying company in the UK.
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