Buying new builds

Ndp

Hello,

I have some questions regarding a new build I hope you might be able to help with

We are first time buyers and have reserved a property that won't be built until possibly July 2019. After instructing a solicitor the developer has stated a period of 42 days for us to arrange a mortgage and pay the deposit. Is this the norm?

(We are using the government help to buy equity loan)

We will be paying stamp duty, solicitor, valuation and other fees associated nearly 9 months before we move?! This includes a deposit more than 5%...

Obviously this will affect mortgage offers but the developer thinks it's pretty easy to apply for an extended mortgage offer with most lenders apart from Santander but I'm not so confident. The mortgage broker said offers can be 6 months or 9 months or possibly longer but I'm just searching for some reassurance...

Has anyone had any experiences like this?

The other question is the cost. Has anyone been able to negotiate with the developer to pay a % of the stamp duty? We reserved the property at list price which is naturally inflated but pretty fair for comparable homes/ new builds however would like to know any haggling tips or tricks ( houses are fully fitted out with flooring and appliances) upgrades are at cost price e.g. kitchen worktops and flooring so can't think of any other way to save money other than on the stamp duty.

Also, one last question

The property is freehold but we have to pay a management fee to someone who cuts the grass and maintains the surrounding areas. Even though the roads and grass outside the house will be handed over to the council we would be paying a maintenance company? It's not a great deal (£150 annually) but I'm concerned it may shoot up in a few years or there will be a new maintenance company after their contract ends that will be more expensive. Again seeking any experience of these charges

Any help and advice would be much appreciated

Many thanks

gardner1

whilst the "government help to buy equity loan" is a great idea......you pay a hefty premium buying a new house,bit like new cars.....as soon as you drive out the showroom it loses money
New houses these days normally come with with loads of niggles and things wrong because they are built so quickly

Ndp

Thanks for the response

I agree but looking at older/ existing homes, we wouldn't be able to get what we need for full market value in the area we need.

Getting a 20% loan interest free for 5 years seems like our best bet to me - even though it will cost more initially

It comes with the 10 year builders guarantee and a two year snagging period

Any suggestions?

kingstreet

You will be unable to submit a Property Information Form & Reservation for HTB approval until you are within nine months of completion (three months to exchange and a further six months to complete.)

In addition, July 19 is into next year's allocation and your builder will not yet have submitted its plans/requirements.

In general, you are expected to exchange contracts within 28 days of reserving, so 42 is longer than usual.

Most solicitors will not permit exchange to take place without a mortgage offer valid at the point of anticipated legal completion. Check your chosen solicitor's attitude to this.

goodwithsaving

Ndp wrote: »

Thanks for the response

I agree but looking at older/ existing homes, we wouldn't be able to get what we need for full market value in the area we need.

Getting a 20% loan interest free for 5 years seems like our best bet to me - even though it will cost more initially

It comes with the 10 year builders guarantee and a two year snagging period

Any suggestions?

This is a really short sighted view in my opinion. If you can't afford what you require, then save for longer and/or buy somewhere to do up. Then it'll be done to a far better standard than a new build anyway, and with fittings to your choosing/liking.


If the house decreases in value, not only will you need to remortgage with a higher-than-anticipated LTV, but you will likely face higher interest rates by then too.

So your mortgage payment will increase.
Then factor in paying the loan back or starting to pay interest on the loan. Even if you only have to pay the loan back when you sell, the interest will mount up however small a percentage it seems.

davidmcn

Ndp wrote: »

We will be paying stamp duty, solicitor, valuation and other fees associated nearly 9 months before we move?!

Are you asking us or telling us what you've been told? You shouldn't need to pay stamp duty, for example, until completion.

hammy1988

To be honest, you should have negotiated before you reserved, making that reservation means that you have preliminarily accepted what the developer has offered and wish to proceed. Before we made our reservation, we were umming and aahing, so that's when the sales rep offered to throw in perks etc, and then we reserved afterwards.

The mortgage length won't be an issue, many mortgages are designed to take into account this Help to Buy system. You will usually be given a get out clause if the property isn't completed before a certain time, so you won't be locked in completely.

We bought our new build a couple of years ago, and we are very happy with ours. Don't listen to all the scaremongering BUT have a plan in place to repay the Help to Buy in the future, that's all I would say.

Hannah2

Re. the maintenance charges, have a look into the company that they are using (Greenbelt?) and research feedback/reports on the company. Find out if the developers will sign the land over to the maintenance company once the development is finished. Make sure you are aware as to what the annual fee will cover and what ad-hoc charges there might be (vandalism, play equipment maintenance, tree/shrub replacement). Be sure of the area/map that the fees will cover, is there woodland involved, open spaces, public areas. Make sure you plan over the next 5 years or more for the fees to increase. Check what you need to do with the maintenance company if you wish to sell your house in the future and what your purchasers will need to do and pay in order to transfer documents into their name.

I would make sure you are happy to accept all the above, plus the unknown increases in costs before you go ahead. Although Freehold you are in effect purchasing a leasehold property due to being linked to a maintenance company (depending on the details on the TP1/deeds).

Good luck!

confuzzelled

goodwithsaving wrote: »

This is a really short sighted view in my opinion. If you can't afford what you require, then save for longer and/or buy somewhere to do up. Then it'll be done to a far better standard than a new build anyway, and with fittings to your choosing/liking.


If the house decreases in value, not only will you need to remortgage with a higher-than-anticipated LTV, but you will likely face higher interest rates by then too.

So your mortgage payment will increase.
Then factor in paying the loan back or starting to pay interest on the loan. Even if you only have to pay the loan back when you sell, the interest will mount up however small a percentage it seems.

I understand this view because its something I had to get my head round while deciding whether or not to buy using HTB equity loan, ultimately we decided that the money we would spend renting for 2 more years would be far better spent paying off a mortgage. A mortgage at 75% LTV so at a much more competitive interest rate than we would be able to afford even after saving for a longer period. There were many other factors involved like weighing up risk/reward as even with the scenario you suggest (buying something that needs work) there is always risk, for example you start work and encounter an issue not discovered by surveys and something you haven't budgeted for. Also not everyone had the skills, time or the patients to take on projects like that.

The point about falling house prices is a fair one and again its all about risk/reward, there is no risk free way to get on the property ladder as far as I can see. We have opted to save to offset the risk, so if the price falls we won't be trapped with a property we can't afford to sell and if it doesn't we'll have a nice holiday.

Ndp

This is really helpful

Considering all the helpful feedback, the maintenance company is now my main concern.

They have terrible reviews (Trinity Estates) and looks like I can't buy the property without being tied to this contract?

After the first finished phase of construction, the majority of areas will be handed over to the council, the developer said the management agency will look after landscaping and pathways etc. That aren't part of the council's responsibility. The annual fee is calculated differently per plot.

The immediate and surrounding areas of our reserved plot will be council but the development will be managed by this agency.

Is there any legal way to protect/ cover ourselves or opt out of this tie with the management agency?

These are great questions that I will definitely be asking

Thanks for the help!

NeilCr

I can't see the developer agreeing to let you opt out. After all, if they let everyone do it who would pay for the landscaping etc.

Do you know what is going to happen to the freehold of the estate at the end. Is the developer going to retain it or is there a chance of the residents being able to take it on. That would give you more control over the Agent.

I've got a freehold house and, in the end, the service charges are something you have to take an informed guess on. To be honest £150 per annum isn't huge and it doesn't sound as though there is a lot there to increase the charges by, significantly. But, who knows?

The reviews are awful but, I guess, it's worth saying that folks tend to go on line to moan not praise. I just had a look at the reviews of our agent (scores better than Trinity) and I don't recognise them at all from some of the comments!