Buying a new-build home

What to look out for and your rights if something goes wrong

Buying a new-build home throws up a unique set of challenges – get it wrong and you risk considerable extra stress and expense. This guide explains what you need to know before, during and after the new-build buying process, with 15+ tips to help make it as smooth as possible.

Consider buying a new-build?

Tens of thousands of new properties are built in the UK every year, so a new-build may well cross your radar if you're house-hunting.

New-builds tend to be highly energy efficient, so typically you can make significant savings on your energy bills – around £2,500 each year according to the Home Builders Federation. And because no one's lived in the property before, the homebuying process can also sometimes be completed much quicker than normal.

However, it's not always plain sailing. There's no resident seller to tell you what it's really like to live there; it can be hard to know if you're paying the right price as the house has never been sold before; and disputes with the builder or developer are sadly not uncommon.

So, if you're considering buying a new-build home, or are in the process of buying or moving into one, see our list of top tips to help ensure you don't trip up and spend over the odds:

Tips for BEFORE you reserve a new-build property

  1. Dig into the developer
  2. Get a 'mortgage in-principle'
  3. Get a conveyancer sorted
  4. Save £s by haggling
  5. Some developers will pay your stamp duty
  6. Check the management fees
  7. Study the property's specifications
  8. Scrutinise your reservation agreement

Tips for WHILE you're buying a new-build property

  1. Getting a mortgage can be tricky – consider using a broker
  2. Read the small print before exchanging contracts
  3. The 'long-stop' is a very important date

Tips for AFTER you've bought 

  1. Be careful about painting and wallpapering
  2. Sort a snagging list
  3. You can escalate a developer dispute for free if necessary
  4. Check the property's registered with Royal Mail
  5. Check if you can cut your council tax costs

BEFORE reserving a new-build property

There's plenty to consider before you even start thinking about putting an offer on (or reserving) a new-build property. Here's a list of things to go through before entering into any kind of agreement with a developer.

  1. Dig into the developer – you don't want to waste money on a cowboy

    When buying an older property, you've got the reassurance that it's stood there for years, decades, or sometimes even centuries. And you can often get insight about the property from the current resident.

    But with a new build, you'll be the first person to live there (for some, that's part of the appeal). And you'll probably be buying direct from the developer or housebuilder – so you're putting a lot of faith in one firm. For that reason, it's crucial to do your research.

    This forumite's unfortunate home-buying experience shows why it's always worth doing the groundwork. Here's where to start:

    • Check reviews online. A good place to gather independent reviews is HomeViews, where homeowners can share reviews about developers and management companies, as well as actual properties, estates and locations (which could be similar to yours). 

    • Check the developer is signed up to a code of standards. This sets out levels of building standards and customer service that developers should adhere to, as well as providing an avenue through which you can raise complaints. Confusingly, there are several new-build codes currently in existence, but there are two main ones – both operational in England, Wales, Scotland and Northern Ireland – so ideally your developer will be signed up to one of them:

      1) Consumer Code for Home Builders.
       More than 95% of developers and homebuilders are currently covered by the Consumer Code for Home Builders. It's been around since 2010 and enables homeowners to escalate developer disputes for free. 

      2) New Homes Quality Code. 
      Launched in 2022, the New Homes Quality Code is expected to become the main code over time, with many developers already registered or in the process of signing up – though properties bought under the shared ownership or Help to Buy equity loan scheme aren't covered by the code. It also comes with a New Homes Ombudsman Service where homeowners covered by the code can escalate developer disputes for free.

      Your developer should state clearly which, if any, consumer code it is registered with. Where a developer has registered with the New Homes Quality Code, this will supersede any other codes it's signed up to.
  2. Apply for a 'mortgage in principle'

    Unsure if you'll be accepted for a mortgage? There's a risk that after reserving a new-build property your application could be declined, jeopardising any reservation fee you've paid.

    Applying for a 'mortgage in principle' (MiP) is a good way of reducing that risk. While an MiP isn't a guarantee of future acceptance, it's a good indicator that a particular lender is likely to give you a mortgage and that you'll be able to borrow the amount you want.

    One way of arranging an MiP is by going direct to a lender (if they offer this option). Alternatively a mortgage broker can arrange an MiP for you. See our Cheap mortgage finding guide to compare our top broker picks – or go direct to a free, specialist new-build broker such as Threshold Mortgage Advice*.

    Before applying for an MiP, it's worth using our mortgage affordability calculator to get a rough idea of how much you might be able to borrow.

  3. Get a conveyancer BEFORE reserving a new-build

    After having an offer accepted on an older property, it usually takes months before you're ready to exchange contracts. But with new-builds, the turnaround time between reserving a property and exchanging contracts is typically around a month (though when exactly you'll 'complete' will depend on whether you're buying off-plan or not).

    So you need to have appointed a conveyancer or solicitor – who'll do all the legal work for you, such as searches, planning permission, access to roads and sewers – by the time you reserve a property at the very latest (and ideally before this).

    You might be pressured by the developer to pick a solicitor or conveyancer from their chosen panel. While there's no obligation to do this, choosing a solicitor that's familiar the developer and the associated paperwork could help speed up the purchase process.

    But always compare what's being offered with solicitors you find independently, including their reviews and prices. Be mindful that solicitor fees vary massively – budget for anywhere from £800 all the way up to £2,000+.

    For more details on how to find a conveyancer, see our Buying a home timeline guide.

    https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/top-tips-for-buying-a-new-build-home/
  4. Save £10,000s by haggling on the price of a new-build

    Don't just assume the price you see advertised online or in the showroom is non-negotiable – where possible, see if you can negotiate down the cost of your new-build.

    You'll have the best chance of successfully haggling before reserving a property or putting down any fees, but there's no harm in trying after.

    If your property's part of a block where others are for sale, start by checking how much they're priced at. You should be able to find this information online or from the developer. If yours is advertised at a higher price, ask the developer why. Does your property have a parking space, garage, private garden or something similar? Demand for such features is high, so if it's missing one of these, try and use this as leverage to negotiate the price down.

    It's also a good idea to see how much similar properties in the area have sold for. Past sold prices are easy to find on Zoopla, Rightmove and the Land Registry. If yours is pitched at a higher price, ask the developer why and try to negotiate.

    According to MSE forumites, other good points of leverage include properties that have been on the market for a while (a sign they might be struggling to sell), and properties sold by firms approaching the end of their financial year:

    A friend of mine bought a new-build that had initially been listed at £249,995. He bought it when it had been finished for a couple of months and it was two months before the builder's financial year-end. He paid £168k. 

    - posted by pinkteapot

  5. Some developers will pay for your stamp duty – potentially saving you a hefty tax bill

    Stamp duty – known as land and buildings transaction tax in Scotland, and land transaction tax in Wales  is a tax charged by HMRC when you buy a property. It can set you back £1,000s or £10,000s (depending on the purchase price), though first-time buyers often get some relief.

    However, it's not unusual for new-build developers to offer to pay stamp duty for you. This is clearly an attractive prospect, though if you're already paying over-the-odds for the property then the potential savings could be wiped out.

    Again, it's worth seeing how much similar properties in the area (or in the same block) are being advertised for, or have actually sold for. If they're going for less, ask the developer to price match AND pay your stamp duty.

    Full info on how stamp duty works and how much you'll need to pay are in our Stamp duty guide.

  6. Management fees can set you back £1,000s EACH YEAR

    Management fees (also known as a 'service charge') can really eat into your budget, so make sure you factor any in when working out whether you can afford a property. Another common term associated with new-builds is 'ground rent'. Both are explained in more detail below:

    • Management fees are usually charged for the maintenance and upkeep of communal areas, such as hallways, lifts and roads. They can be charged on both leasehold and freehold properties (see our guide on the differences between leasehold and freehold), and can cost £100s or even £1,000s a year – a serious dent in some people's budget.

      Importantly, lenders are likely to take management fees into account when looking at your mortgage application. So if you're already near the top of what you can afford, this could impact how much a lender is willing to let you borrow.

      For this reason, always ask the developer for information about your property's management fees BEFORE you reserve a property (details should be provided as part of the property's specifications or the reservation agreement). Some key questions to ask include:

      – How much are the management fees and what do they cover? Check if it's just maintenance and upkeep, or if things like buildings insurance is included. Is money also being set aside for potentially major maintenance in future? Question anything that doesn't look reasonable.

      – Do all the residents on the estate pay the same management fees? If there are differences between properties then ask why.

      – When are the management fees due and how much will they rise by? Find out if you're expected to pay monthly, quarterly or annually and budget accordingly. Bear in mind the fee is also likely to rise over time – find out how much by.

    • Ground rent is an annual fee that's traditionally charged on leasehold properties (which many new-build homes are – though for most homebuyers the issue of ground rent is now irrelevant). Payable to a leasehold property's freeholder, ground rent can be anything from a few pounds to several hundred a year. Some nasty leases double the amount of ground rent leaseholders pay as often as every 10 years.

      Thankfully, it's now illegal to include ground rent on most new leases. This means you shouldn't be charged ground rent if buying a new-build leasehold property. But just to be safe, it's still worth checking – or getting your solicitor to check – whether your lease has any ground rent sneakily written into its deeds. If so, ensure the ground rent clause is removed.

    We found a new build freehold house we really like. We paid reservation fee before looking into service charges in detail. Big mistake. There was a nature trail / large public area done up by developer to one side of the development. Management charges existed for its upkeep. Worried the fee would escalate and we'd obligated to pay with no recourse.

    – posted by Moffat_Sea

  7. Ask for the property's specifications so you know EXACTLY what you're buying

    When buying a new-build – particularly if it's 'off-plan' (meaning not even built yet) – it's crucial to grill the developer for as many of the property's specifications as possible.

    Physical specifications list things like what materials are being used, colours, dimensions, spaces, floorplans, and so on. Non-physical specifications include information about the property's tenure type, and whether it has any management or service fees, for example.

    Press the developer for as much information relating to the property's specifications as possible, preferably in writing. Pass this information onto your conveyancer or solicitor. If nothing's written down, it's harder to verify if the developer has followed through on what was promised.

    Use the list below as a specification checklist. Developers registered with the Consumer Code for Home Builders, for example, MUST be able to provide this information:

    - Size of property, room and plot dimensions, plus specifications
    - Tenure details (in other words, leasehold or freehold)
    - Energy Performance Certificate (EPC) rating
    - Mobility adaption
    - Management / service charges
    - Pricing of property
    - Warranty details
    - Estimated completion date (if not already built)
    - Any resale restrictions / covenants
    - Any future phases of development
    - Predicted council tax band

    You may also want to enquire about any cladding on the building. Since the Grenfell Tower disaster, this has become a massive issue for homeowners and lenders. If you have cladding concerns, ensure you raise the issue with your solicitor / conveyancer.

    Important: Promotional material or a showroom visit is NOT the same as finding out a property's specifications. Ask for information relevant to the specific property you're interested in.

  8. Scrutinise your reservation agreement and see if you can get anything extra chucked in for free

    To reserve a new-build property you'll usually have to put down a reservation fee. This can be anywhere from around £500 to £2,000-ish.

    Be warned that reservation fees are often non-refundable after a certain period, or at best, part-refundable. While some developers offer a 'cooling-off' period, meaning you'll get all your money back if you need to pull out early on, always check how long this is before putting down any reservation fee.

    Make sure you also look out for details of the following in your reservation agreement (if not all the details are available, see if they will be included in any other pre-contract information):

    • The reservation fee (which should be deducted from the property price)
    • The total purchase price of the property
    • Your cancellation rights
    • Details of the property type, plot number, development name, postal address (if available), parking arrangements, etc
    • Estimated completion date (if not already built).
    • When the reservation period ends.
    • Any management or service fees you'll be responsible for paying
    • Details of its tenure (whether it's a leasehold or freehold property)
    • Anything you won't own or won't gain ownership of immediately

    Make sure you ask EXACTLY what's included in the purchase price. Does it include the balcony? Is there a parking space? See if you can nab any extras. What about the show curtains, carpeting, tiles – can you keep those? Some developers throw in white goods too, such as dishwashers and washing machines (worth £1,000s).

    I unfortunately had to withdraw from a purchase of a new build house after paying £1,000 reservation fee. The developer agreed to refund £500 to me within a few days, retaining £500 to cover their costs. 

    - posted by seanfos

WHILE buying a new-build

Once you've found a property you like and you're ready to reserve it or place an offer, the purchasing process starts to speed up. But there's still plenty of important legwork to be getting on with, much of which could help you save serious cash.

  1. Getting the right mortgage can be tricky – using a broker can mean you don't overpay

    Once you've reserved a property, it's time to get your mortgage offer sorted. But finding the right mortgage can be tough, and buying a new-build can complicate things further. Here are two issues to be mindful of:

    • Lenders can be wary about lending on new-build properties. Some lenders worry that new-builds won't retain their value, or have concerns about the potential materials used in construction (such as cladding). This means you might find it more difficult to be accepted for a mortgage, or a lender might cap how big a mortgage you can get with a new build property.

      For instance, Nationwide's maximum loan-to-value (the proportion of the property's value you're borrowing as a mortgage) on new-build properties is normally limited to 85%. In other words, you need to have at least a 15% deposit to take out one of its mortgages on a new-build.
       
    • Mortgage offers expiring before you're ready to move in. A mortgage offer is normally valid for between three and six months. This should be plenty of time if you're buying a new-build that's already been built, but it could be a problem if you're buying off-site.

      If your mortgage offer expires before you can complete the purchase, your lender might insist you start the whole application process again. By then, interest rates might have risen, there'll be another hard check on your credit file, and there's no guarantee your application will be accepted second time round. 

    It's often best to consult a mortgage broker. They have information about which lenders are most flexible when it comes to new-builds, and can advise on which lenders are likeliest to accept you as borrower. Plus, if you're in need of a mortgage offer quickly (possibly because you've only got a month between reserving a property and exchanging contracts), a broker will be able to advise which lenders have the quickest turnaround times.

    See our Cheap mortgage finding guide to compare our top broker picks – or go direct to a free, specialist new-build broker such as Threshold Mortgage Advice*.

    It's also worth taking the time to read our Boost your mortgage chances guide to increase the likelihood of acceptance by a lender. 

  2. Double check the details before exchanging

    After reserving a property, you'll typically have around a month to exchange contracts, at which point you'll be required to put down a deposit. Get the developer or builder to explain what protections are in place for your deposit.

    Then have a meticulous read of the contract (your solicitor should also do this), and ensure it tallies up with what was written in your reservation agreement and any other pre-contract material. Also familiarise yourself with the circumstances (if any) in which you're allowed to terminate the contract – for example if the developer significantly alters plans for the property.

    Once you've signed and exchanged, you and the developer or builder are legally bound (subject to any termination clauses).

  3. Property not finished by the 'long-stop' date? You're due your money back

    Where buying off-plan, you're be putting a great deal of trust in the developer as the property won't have been built by the time you come to reserving or exchanging contracts.

    Sadly, delays to construction, while not inevitable, are a possibility. Delays cause unwelcome issues, not least because it might mean you move in later than anticipated. Another headache might be finding that your mortgage offer has expired by the time the property is ready to be moved in to.

    So, to protect you, the developer must agree on a short-stop and a long-stop date, both of which will be written into the contract:

    • Short-stop date – an estimate of when the property will be complete.
    • Long-stop date – the date by which the property must be completed. 

    It's in your interest to negotiate the long-stop date if you're unhappy with the developer's proposed timescale. If you've already had a mortgage offer, negotiate to ensure the long stop date falls before (or at worst, on the day) the mortgage offer expires.

    Where the property isn't complete by the long-stop date, you've a legal right to walk away from the purchase and get a full refund (including any reservation fee and deposit).

    We bought a new build in 2020 and our long-stop date was one month after the estimated completion (or short stop) date  – initially there had been a three-month gap between the two. At first our estimated/long-stop dates were 30 June and 30 September. However, on the day we were due to exchange contracts the developers changed the dates to 30 September and 31 October. This was due to Covid and other delays they encountered.  

    - posted by OldMusicGuy

AFTER buying a new-build

Moving into a property that's never been lived in before can throw up some issues, so it's best to be prepared. Here are our top tips if you're about to move in or already have.

  1. Be careful about painting and wallpapering

    There's nothing stopping you painting and wallpapering the inside of your new home if you don't like what's there. However, you should be careful if your home has just finished being built.

    The National House Building Council (NHBC), a leading insurance and warranty provider, advises waiting between six and 12 months after a property's been built before you start redecorating. This is to allow the drying out process to complete.

    Shrinkage cracks can sometimes appear in new-build properties over the first year as the materials used to build the property dry out. The NHBC says it's best to let these appear first before embarking on redecoration.

  2. A snagging list helps pinpoint defects and structural flaws

    Hopefully your brand new home will be picture perfect by the time you move in. The reality is though, there may be some unwelcome blemishes or defects.

    Fortunately, where there are any 'snags', you should be covered by the warranty. Make sure you check the details of the warranty – such as how long it lasts and what it covers – before you exchange contracts. Typically though:

    • 0-2 years. Developers are typically required to fix major structural issues, as well as any minor blemishes or defects found within the first two years of you buying the property. 

    • 3-10 years. After two years, it'll likely be that the developer is only required to fix any major structural issues. This'll normally apply for 10 years after buying the property.

    It's up to YOU to point out any defects or blemishes to the developer. To help, many people compile a 'snagging' list.If you're not sure what's fair game to include, see this forumite's snagging list for inspiration.

    You can pay for a firm to collate a snagging list for you, which'll likely cost a few hundred pounds. Or if you want to do it yourself and save the expensive, there are free snagging lists to be found online. More details on the different snagging options in our Buying a home timeline guide.

    If you do spot any minor snags, developers are normally expected to be fix these within 30 days. 

  3. You can escalate an unresolved dispute with a developer or homebuilder for free

    Where you've got a complaint with your home builder or developer, for example about the level of service you've received, your first port of call is to take up the issue with the developer directly. All developers should have a clearly-marked and free complaints process.

    If after contacting your developer the complaint remains unresolved, check if your developer is signed up to a code of standards, as they usually have an independent complaints process. Below, we've covered how it works for two major homebuilding codes. If your developer is registered with a different code (and there are several) check the code's website for details.

    Consumer Code for Homebuilders

    1. Contact the developer's warranty provider. The warranty provider will then try and resolve the problem (details of who the provider is should be on your paperwork). You'll normally have until up to 12 months after the developer's final response to your complaint to escalate the dispute to the warranty provider.

      If the warranty provider can't resolve the dispute, or it's a dispute that doesn't concern the warranty, you can then...

    2. Escalate your complaint to the Independent Dispute Resolution Scheme (IDRS). It's free for you to escalate an unresolved dispute to the IDRS. It might order the builder or developer to carry out remedial work or award you compensation, but be prepared to submit evidence in support of your case. You'll have until up to 12 months after the developer's final response to your complaint to contact the IDRS.

      Another option – if the complaint concerns the warranty provider – is to escalate your case (for free) to the Financial Ombudsman. However, the ombudsman won't be able to deal with general complaints about your home or how your developer has treated you.
    • Case studies

      Each year the Independent Dispute Resolution Scheme (IDRS) publishes a summary of the many disputes between developers and homebuyers that it has dealt with.

      To access the full list, see the IDRS website, but below we've picked out a few cases to give you an indication of what a typical dispute looks like – and what you might get if your complaint succeeds.

      Case example

      Complaint. A homebuyer complained that their developer had refused to fix several scratches on a number of windows, despite having reported these within the required snagging deadline.

      Defence. The developer argued that the damage to the windows hadn't been reported on time, adding that they believed the damage had been caused by the homebuyer.

      Finding. The complaint succeeded, with the IDRS directing the developer to apologise to the homebuyer and pay £200 in compensation.

      Case example

      Complaint. A homebuyer claimed that the ceiling height in their property was lower than in the show home they viewed. The homebuyer said they'd have offered less money had they known the ceiling height was lower.

      Defence. The developer argued that there was no reference to ceiling heights in any of their materials and all the information in relation to the show room reflected the property that the homebuyer bought.

      Finding. The IDRS found that though the homebuyer had been presented with all the relevant marketing material, the showroom was not an entirely accurate representation of the homebuyer's property. The developer was ordered to apologise to the homebuyer, but no compensation was awarded.

      Case example

      Complaint. A homebuyer claimed she discovered a defect to the her bathroom tiling, but it took the developer more than two months to attend. The developer removed the tiles and the shower, but then didn't return for a year to replace the shower and tiles – and when it eventually did, the new tiles were not a good match to the original tiles.

      Defence. The developer admitted that while there had been a delay in finding similar tiles, the new ones they used to replace the bathroom were a suitable match. The developer also argued that the pandemic had been the main reason behind the delays to replacing the shower and tiles.

      Finding. The claim succeeded, with the IDRS finding that there had been an unreasonable delay to the replacing of the shower and tiles, resulting in the homebuyer being without a working shower for a year. Compensation of £500 was awarded.

    New Homes Quality Code

    1.  Lodge your unresolved complaint with the ombudsman. You'll first need to upload any evidence, after which the ombudsman will be able to send your dispute to the developer. See the New Homes Ombudsman Service website for more information on lodging a complaint.

    2. The ombudsman will consider your developer's response. Further enquiries of the developer will be made if necessary.

    3. A draft and final decision will then be issued. You and your developer will have an opportunity to submit further comments in between the ombudsman issuing its draft decision and its final decision. The ombudsman has a range of remedial tools at its disposal, which can include awarding compensation.

    Do note that homes bought through shared ownership or affordable housing schemes such as the Help to Buy equity loan AREN'T covered by the New Homes Quality Board, meaning that you won't be able to access the New Homes Ombudsman. Instead, you might have access to the Housing Ombudsman Service or the Property Ombudsman.

  4. Address not showing up online? Check the property's registered with Royal Mail

    When you move in, your new address needs to be registered with Royal Mail. If not, you might find your address doesn't show up online when arranging deliveries, and you may find it more difficult to take out new home insurance.

    Before moving in, make sure to check with the developer that they have registered the address with Royal Mail. If you've already moved in and your address doesn't show, you can contact Royal Mail directly and request the address be registered.

    When we bought our new build last year it took an age for the address to show up on some systems. It took the Driver and Vehicle Licensing Agency (DVLA) about six months to recognise the address!

    - posted by RelievedSheff

  5. Check if you can cut your council tax costs. Many are due discount or reductions worth £100s or even £1,000s

    Once you've moved in, council tax will be one of your significant outgoings each month. Yet many people are overpaying. In brief:

    Are you due a discount or reduction? 

    Many people are due legitimate discounts and reductions off their council tax bill, including (but not limited to):

    - Students
    - Those who live alone (or only with under-18s)
    - Those with a disability or severe mental impairment
    - People on a low income / benefits.

    Full details, including how big a discount you can get and where to apply, in our Council tax discounts guide.

    Is your home in the wrong council tax band? 

    Hundreds of thousands of homes are in the wrong band and while most are older properties, it's not unheard of that new ones are included too. Just in case, see our Council tax bands guide for more information on how to check if you're in the right band, and what to do if you believe yours is wrong.

Looking for more home-buying help?

We've got lots of other helpful guides and tools if you're looking at buying a home (whether brand new or not):

Tip Email

FREE weekly MoneySaving email 

For all the latest deals, guides and loopholes simply sign up today - it’s spam free!

Spotted out of date info/broken links? Email: brokenlink@moneysavingexpert.com