Buying a new-build home
These are challenging times for homebuyers. Mortgages are hard to come by and deposit requirements are steep. But there are options out there, and, with the recent introduction of the Government backed NewBuy scheme, it is possible to get a new home with a 5% deposit. New build homes can offer the potential house buyer ways of overcoming the lack of mortgage availability and are a wonderful option for people looking for a lovely new home.
A recent survey by Rightmove showed that in their experience of the new-build property sector, around half of those who purchase a new-build home don’t set out to purchase one initially. Many people don’t seem to consider new build as an option for them, but then when they actually look, they fall in love with them.
In recent years the home building industry has been hit hard. A lack of mortgage lending has seen the number of new homes being built fall to record levels and we are now building fewer homes in this country than at any time since the 1920’s. That said, there are still new homes being built – over 100,000 last year in England across all parts of the country. And they are being built to a higher standard than ever before, saving you money and providing welcome peace of mind.
New homes are built for modern living and their design reflects this. There are a range of sizes and types that suit all needs and budgets, meaning newly built homes have become the preferred option for many, especially in the current climate.
Customer satisfaction levels for new homes are at an all-time high and are at levels that match or exceed probably any other product. In this year’s independently-assessed industry survey, 90% of people who purchased a new build house in the previous year were satisfied or very satisfied with their pristine homes. The same number said that they would recommend their builder to a friend, a reflection of the drive by the industry in recent years to increase its level of customer service.
This is exemplified by the sales staff on house building sites. Trained staff are able to guide would-be buyers through the home buying process to ensure they are aware of all the potential pitfalls and options on the home buying journey. They will also be able to talk customers through the alternatives in terms of mortgages.
Unlike when buying a second hand home, house builders are able to offer choices to buyers that may be the difference between whether people can afford to buy a home or not.
There are a range of schemes available that each help buyers in a different way. In recent years house builders have invested over a billion pounds in shared equity schemes that mean buyers only buy a % of the property and so need to find a smaller mortgage. One example is Firstbuy, a Government backed scheme whereby the developer holds 10%, the Government holds 10% and, so with a 5% deposit, the purchaser only needs to get a mortgage for 75% of the property.
Over the past couple of years it has helped over 10,000 people get on to the property ladder and in September, the Government allocated further funds for a scheme that is now well understood by developers and buyers. Newbuy is another option.
Over the past few years the main barrier to people buying a home has been their inability to save up the large deposits – sometimes in excess of 20% – required by lenders to secure a mortgage. In years gone by, the bank of mum and dad has helped people with deposits. But the amount of deposit now required has often taken this option well above the credit ceiling of that particular lender. It has resulted in many people having to rent whilst they try and save the deposit, or where possible, move back in with parents.
NewBuy is a Government-backed scheme that allows buyers to get a 95% mortgage on new build homes. It is an ‘indemnity scheme’ that means the developer puts aside money from the sale that can be used to protect the lender. This doesn’t in any way impact on the buyer, who has to qualify for a mortgage in exactly the same way as normal, but only needs a 5% deposit to put down. Most of the big builders and many smaller ones are now signed up for NewBuy and it is available on all the homes priced up to £500k of the builders involved.
Since its launch in March, interest has gradually ramped up and we are now seeing a steady flow of reservations come through. It is open to first time buyers as well as ‘second steppers’ who may now need to upsize because of a bigger family but haven’t got the required equity in their existing home to move. Go to www.newbuy.org.uk to find out more.
Obviously, developers want people to buy their homes – that is why they are in business. What that means for consumers is that builders can be more flexible with potential buyers. Many developers now also offer part exchange so making the whole process of selling a home and buying a new one a much quicker and less stressful process.
With a new build there is of course no chain, so all the potential delays are removed. Everything in a brand new home is by definition brand new which means, thankfully, that you don’t have to put up with someone else’s choice of fuscia bathroom or a leaky kitchen.
Fixtures, fittings and appliances are all new and some developers offer you the option of choosing what will be in your new home. It means that once you are in, your time is your own. No long weekends up a ladder painting or fixing up broken cupboards; and no expense or inconvenience getting a new kitchen fitted.
It is your blank canvass on which you can stamp your own style and personality from day one. You will also save money on your heating bills. New homes are built to much more exacting standards in terms of thermal efficiency than older homes. All windows are double or triple glazed and walls and roofs are insulated with the most up-to-date techniques and products. In addition, new homes are fitted with a range of energy saving devices and features like energy efficient boilers, all of which save you more money. It is estimated that a new home, compared to a similar sized Victorian one, is around £800 a year cheaper to run, money that can be very usefully be put to work elsewhere! You will also be helping the environment, living in a home that is emitting 60% less carbon dioxide than an older home.
And with a new build home you get a level of confidence in your investment that you don’t from a second hand home. Every new home built comes with an independent warranty that protects you against any major problems for a decade. So whilst you may not have considered new-build before, it is worth having a look. New builds offer a wide range of ways to buy and a wide-range of products and a brand spanking new home of your own! Pop along to your local showroom and see – you may just be surprised.