New Build Property Risks and Mistakes to avoid

by Jul 27, 2020Personal Finance

New Build Property Risk and Mitigation 

New build property risk

Buying a new home (New Build Property) is a dream for number of families. Families spend their lifetime to own a home, right saving for the deposit to fully repaying the mortgage. It is daunting to find your dream home and it takes a lot of effort to decide on a property. It is far more important to consider several factors that might involves some risk when buying a new build property. Attention to every details on plan can avoid the risk.

1. Boundaries

Know exactly what your boundaries are and what it is your responsibility in it. For example, the fence between you and your neighbour might be your responsibility to maintain. In some cases, your neighbour’s garage would be in boundary and you will have to provide access to your neighbour.

2. Service Apparatus in New Build Property

Enquire your builder with plenty of questions to find any service apparatus or shared areas in your property. For example, lamp post or bin collection point (BCP) might be in your plan but your builder might not explain this to you . Homeowners with BCP have to provide access to neighbour to place their bins on the bin collection day. This is a huge risk as wastage may spill over in your front garden.

3. Estate Management Fee

The management company charge a fee to maintain the shared amenities and space adopted by the local council in the estate. Some builders will not mention this when you reserving the property and many buyers will come to know after or at the time of completion. Estate management fee could increase over the time. Due to escalating and uncapped estate management, some banks refuse mortgage to new buyer. It is risk when you remortgage the property maybe 2 or 5 years after buying the property.

4. Offers

Do not falls prey of the offers from the builders. Genuine offer are good but in many instance the offers provided for properties with pitfalls. Offers might include free carpets, kitchen appliances, cash back on stamp duty. This can certainly save you money upto £15000 but this a carrot and stick strategy from the builder to sell you the property which are unsold. Remember you are buying a dream home for one life, do not compromise the quality for these offer.

5. Timeline

A very common timeline promised to the buyer is 6 months but it most likely the builder will not complete the property within promised time. It is likely, the property completion can be delayed upto 6 months from their committed timeline. The exchange of contract might a have grace period upto 24 months to complete the property. Therefore, it is recommended to agree with the builder a long stop completion date. As a result, the builder is liable to pay you the compensation in case of delays to committed completion date.

6. Quality of New Build Property

The biggest risk of all is the quality. Unfortunately, it is not easy to find until you step into your property. However, taking some measure can avoid the risk. The best one is to speak to the buyers in the estate to find the quality of the property and responsiveness of the builder to fix the snagging after they moved in. This is an important factor to consider as likelihood of snagging in the new build properties is high. A responsiveness builder will fix these issues in no time. It is good indication to stay away from buying the property with a poor aftercare and customer services.

Top Tips for Buying New Build Property

  • Avoid using the solicitor proposed by the builder when buying new build properties. It is very likely, the solicitor act in the favour of the builder and not inform you about any pitfalls in the property.
  • Builders use selling fast strategy to make buyers reserve the property and exchange contracts at the earliest. Take your time and compare the new build with old builds in terms of space, quality and premium cost paid before reserve a new build property.

Buyers pay premium for a new build properties for buying their dream homes. In conclusion, pay attention to every details in the plan and exchange of contract can avoid the risk and the dissatisfaction later on.

About Me

My name is Naresh Jayakumar. I am mastering personal finance to effectively manage, save and grow money. I’m on my happy jounery to financial indenpendence.

I blog to share the tricks and hacks of making, managing and saving money to help others achieve Financial Independence in their lives too.

 

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