New Builds

jonnyblue

Hi

Ive recently been looking at a new build property nearby, although the area isnt fantastic there are a lot of new build developments being built in the area and there pretty affordable. Theyre for 2 bed/2 bath flats with excellent motorway links for the M6 so renting the 2nd room shouldnt be a problem

Basically i was wondering if there is anything that you need to look out for with new builds or is the buying process different.

For exmple, the gross price is 115,995 minus a 15% discount, the actual price is 98,596 with equity of 17,399. What exactly does this mean ? If im reading it corectly there saying the value is really 115k but surely the value is what someones prepared to pay and this is just a random figure ?

Secondly, Are prices etc as negotiable when your buying a new build through a developer or is it pretty much, you pay what they ask?

Thirdly, with these properties there is an reservation fee of £500 plus an arrangement Fee 2% of gross price + vat. Is this normal as it does seem quite a lot ?

Any advice or experience of new build flats would be much appreciated. Thankyou

Barney088

What does that mean indeed.

New build property is (I'm guessing in your case) sold by the larger building firms selling huge volume of property and it's all done to make profits, to please shareholders etc. Each quarter they will be set a traget to sell £X worth of houses and they will do anything they can to make them hit target, and in your case they are "giving" you £17K. This is clearly working in your favour as you have a house with £17K equity. The question that a lot of lenders are asking is "Is the house really worth the top figure?" Is the flat you are looking at worth £116K in the current market conditions, it is likely NOT to sell for that if you sold it tomorrow, there will be a premium on it as the property is new.

Builders have tried all sorts of deals to maximise the top price, giving you a year worth of mortgage payments, carpeting the house, fitting all the kitchen items etc and a 5% deposit was the norm, recently this has increased to £15% and some lenders (Portman B/S, Derbyshire B/S Bristol & West) are not playing the game anymore.

They believe that the price it is worth is the lower figure now, in your case £98K and no more.

The holding deposit and arrangement fee etc will be variable, based on what they are giving you I guess and the fee does not seem too steep if the property is worth the top figure.

The price is not normally negotiable as they have targets to meet and there will be more people like you coming along every day. They are not doing you a favour, they are selling something to make profit and as such you are just a number.

I have been involved in loads of new build and I have not come across a problem with it, recently the large deposit is causing issues with some lenders but get some good advice over this and you should avoid lenders who have problems dealing with it.