Advice Needed - FTB in New Development

Gunderful

Hi,

We have started looking at new developments for our first house purchase after being disappointed with properties nearby in our price range.

I've done a lot of research of potential sites and properties but had a few questions I was hoping for some help with:

1) The development has a "price list" - what does this mean in practice, will developers accept offers below this?
2) If buying off plan how much say can I have over the interior such as fittings, sockets, carpets and paint colours?
3) To reserve a plot some sites have quoted £2k to do this that is non-refundable, is this usual and again negotiable?
4) If buying off plan do you wait until the property is built before getting a survey done and if so would you wait until then to finalise the mortgage arrangements?

lincroft1710

being disappointed with properties nearby in our price range.

As a rule you'll pay more for newbuild

1) The development has a "price list" - what does this mean in practice, will developers accept offers below this?

Whatever you can negotiate, will depend on how badly developer needs to sell.

2) and 4) If buying off plan

Try to avoid buying off plan

3) To reserve a plot some sites have quoted £2k to do this that is non-refundable, is this usual and again negotiable?

Not unusual probably not negotiable but try anyway

getmore4less

The biggest problem with new build especialy off plan is making sure the contact has all the right get out clauses.

The main one you need is for lending timing out.

Since most lenders will not keep a deal open for ever you cannot exchange until you have a final build date that matches the mortgage deal.

Then you need a get out if the builder cannot complete which does happen.

Kyrae

Builders seem to be less willing to drop prices at the 'off plan' stage, and more willing to add free extras like carpets, turf, etc. Worth a try in offering a lower price though, worst they can do is say no!

As for how much say you have over interior fitting... that's something only the builder can tell you as it varies from builder to builder. Usually you can pick kitchen cupboards and worktops, bathroom tiles, and carpets & vinyl. Fitted wardrobes are usually optional and extra.

Walls are usually painted magnolia, and it's recommended that you do not paint or wallpaper the walls for 6 months or so to give the house time to dry out, otherwise you're likely to get cracks appear in the paint etc and you'll have to repaint them anyway.

Sockets can usually be upgraded to metal and fancy finishes at an extra cost, and you can add other extras like security alarm, outside tap, shower over bath, extra plug sockets, etc. They tend to be very overpriced though and you could probably get them done by an outside company for a lot cheaper.

Reserve price varies from company to company, usually from £200 upwards. £2k seems a bit high, could try negotiating.

Once you've place your deposit you speak to a mortgage advisor and make a mortgage application. The mortgage lender will send a surveyor to look at the plans and speak to the builders, and they will come back to the bank with an estimate of how much they think the property is worth, and they'll pass the information on to you. You'll probably have to pay a fee to the bank for this, but some mortgage offers include this paid for you. The mortgage company will then decide whether or not to lend to you, and if the asking price is more than the value, then you might have to renegotiate with the builder and get them to drop the price.

I can't speak for all builders, but ours wouldn't exchange contracts until we had a mortgage offer in place, so we had to apply for the mortgage before the property was built. Listen to the above posters though, if your mortgage offer is due to expire before the property will be built (most mortgage offers last 3 to 6 months) then it's important to get a clause in the contract with the builder allowing you to pull out and get your deposit back if your mortgage offer expires or is withdrawn and you cannot find another mortgage. There's been terrible stories of delays in houses being built, mortgage offers expiring and people being unable to find new ones due to lending criteria changing (eg no more 100% mortgages) or people being made redundant, and the builders taking people to court to force them to complete. No one can predict the future, so it's best to be cautious and get a clause just incase.

Hope that helps

Fire_Fox

Don't buy off plan until you have run a search on the board of the many people who cannot raise a mortgage in order to complete the sale, and are at risk of going bankrupt.