From the Archive : Help to Buy a property (2013 Edition)
Are you looking to take advantage of the government’s Help to Buy scheme? Well if so you’ll have to go for a new build property, an area many people do not have much experience in.
We’ve got Nick Evans of Stacks Property Search on board to help give you his top ten tips on how to invest in new builds, with particular reference to the government’s new Help to Buy scheme.
1. How new is ‘new’
A new property is only ‘new’ for a very brief period of time, and you will be paying a premium of as much as 25 per cent for its newness, much as you do when you drive a new car out of a showroom. So it’s always worth comparing similar ‘old’ properties, in terms of value, space, rental value etc. just so you are going into the purchase with your eyes fully open, and a full grasp of the local market. Check the price per square foot and compare it with the resale market so you understand the extent of any premium you’re paying.
2. Get your dates right
Be aware of completion dates for all phases of the development. If you buy early in the life of the development you may get a good price, but you run the risk of living in a building site for months or even years to come.
3. Dealing with developers
If you’re buying on a development, find out what’s been paid for similar houses before you start negotiating, and remember that developers will be pressurized towards their year end, so that may be the time to put in a silly offer. Push for serious discounts in addition to any financial incentives that are being offered.
4. Watch the trickery of dimensions
New homes can be incredibly small, but it’s easy for the eye to be deceived when you’re viewing, either because there’s no furniture at all, or because furniture is minimal and specially designed and arranged to make the rooms look bigger.
5. Clever marketing
Don’t be seduced by clever marketing. However clean, new and packed full of modern technology the property appears, try to picture how it will look five years down the line.
6. Traditional is best
In a weak market people prefer to play it safe and opt for traditional styles – avoid cutting edge architectural statements as property can date incredibly quickly.
7. Going off plan
Buying off plan is a high risk strategy in the current market, but if you’re looking at substantial discounts (up to 40 per cent) it may still pay dividends. And remember that the first and last properties on a development are the ones the developer is most anxious to sell and are where the best deals are to be found.
8. Structural surveys
Get a full structural survey. In an old house you can often see what’s wrong, but with a new one the problems won’t have come to light. Don’t assume that the National House Building Council guarantee covers you for problems that arise – claiming for problems in this way will give you years of torment and aggravation.
9. Energy efficiency
A new home should be energy efficient and low maintenance; you have a blank canvas to work with; there will probably be plenty of modern technology, fixtures and fittings, and security and safety features; and the purchase should be straightforward without the confusion of a chain. But do check that this is the case. Have a look at the Energy Efficiency Rating – don’t expect it to be up there in band A, with a 100 per cent rating. Most new houses are generally in category C of the energy efficiency rating (69 per cent to 80 per cent), and ideally it should be at the upper end of that category.
10. Cutting corners
Builders and developers have been through a tough period and their margins are tight; there’s a possibility that they may have cut corners and quality. Make sure there is a snagging arrangement in the contract – many developers are trying to avoid this, but it’s often the case that you need to live with a new house for a while before problems materialize.