While the new build industry has not been immune to the slowdown, there is no question that there are still activity hotspots in certain parts of the market. Savvy investors are busy snapping up properties at discounted rates and chain-free, first-time buyers are in a great position to negotiate.
But there is another, darker side to the current marketplace. And that is for the under-informed amateur buyer of a few years ago who bought off-plan, when in some cases prices were up to 20 per cent higher than they are in today’s market.
Now, as the development they bought into nears completion, some find themselves in a precarious financial position. These are buyers who did not do their due diligence at the time and in today’s market are paying the price.
A developer might not discount the price, but they might be prepared to offer extras such as Stamp Duty incentives, furniture packages, and contributions towards legal fees
We’ve put together a series of advice points for buyers – of any property, but particularly new build – to ensure they protect themselves against future market falls:
1. Speak to other reputable local agents not connected to a project and ask their advice about the development and its current and projected values. Compare and contrast the feedback.
2. Compare the price of the development you’d like to buy in to other like-for-like products in the area. If there aren’t any, pick a similar area in terms of quality and transport links.
3. Use the portals like Rightmove and Zoopla. All of them offer valuation tools that are free to use.
4. If you are planning to rent out your property, speak to the developer, selling agent and local agents to get rental comparables. Check for any restrictions that might require extra cost and paperwork.
5. Take responsibility and stress test your own situation. A good agent will help you think through realistic scenarios that you can stress test against.
6. Use your common sense and understand what you are paying for. If you have a riverside view or a five star, hotel-style concierge service, then you will pay a premium price of up to 15 per cent. Be prepared for a premium, but don’t pay over the odds.
7. Even in a buoyant market, it’s always worth negotiating. A developer might not discount the price, but they might be prepared to offer extras such as Stamp Duty incentives, furniture packages, and contributions towards legal fees.
8. Finally, make sure you have a firm understanding of the delivery date of the communal facilities and amenities so there are no surprises. If you are living in the property yourself, you might have to continue your gym membership for a few months longer until the gym is ready, for example. If you are planning to rent out your property, you may have to charge a lower rental fee for a time until the facilities are completely ready.
You won’t regret investing the time to ask the right questions now, so you can make an informed decision about your new build purchase.