Aug 12, 2023

Four things to consider when purchasing a newbuild home

The north and north-east of Scotland has a range of newbuild options but there are factors to be aware of that can come as a surprise compared to making a property purchase on the open market

Aberdeen currently has a number of housebuilders on site in a range of locations, bringing a mixture of property types to the market.

A newbuild comes with a range of advantages, from having the option to choose your own fittings, to the fact that it comes at a fixed price which avoids a bidding war.

However, for those who are either first-time buyers or haven’t been in a newbuild before, there are factors to consider that can come as a surprise compared to making a purchase on the open market.

Jennifer Leslie, associate and newbuild specialist at full-service legal firm Gilson Gray has the following advice:

Rather than the buyer making an offer, the housebuilder will be the one to issue the buyer’s solicitor with an offer to sell.

Most builders have a standard offer to sell, which contains conditions which the buyer must agree on – and they are not normally negotiable.

This marks the start of the missives process and you will have a set timeframe to accept the conditions detailed in the offer. After that point, the missives are legally binding.

Unlike a typical property purchase, the cost of a newbuild is paid in three stages. Firstly, you will need to pay a reservation fee to secure the plot that you want.

This fee can vary, depending on the developer and if you change your mind for any reason, it is unlikely that you’ll get this money back.

Secondly, you have a deposit to pay when the offer to sell is accepted and the missives are concluded.

This is the point that you are legally bound to purchase the property. The deposit will be a percentage of the total house price and will need to come from your own funds. The deposit is paid via your solicitor.

Finally, on the day that keys are handed over there will be a balance to pay: the purchase price, less the reservation fee and deposit.

Bear in mind any extra costs, such as a float payment to factors and legal fees and land and buildings transaction tax will also be payable at this point.

The housebuilder will usually provide an estimated entry date once you reserve the plot. It could be months, or it could be years away, but it is only a guide.

The exact date will be confirmed a couple of weeks beforehand, when the required checks have been completed. You need to be prepared to move at short notice.

Often one of the most attractive features of buying a newbuild is the offer of incentives. These can range from financial support for Land and Buildings Transaction Tax (LBTT) or solicitor’s fees to flooring or white goods.

Choosing your own kitchen or bathroom is one of the big perks of buying a newbuild, but the extra costs can add up if not included as part of an incentive.

If you choose a kitchen upgrade, for example, this will likely need to be paid for upfront.

On the other hand, if you select a financial incentive, remember that you won’t actually receive the money.

Instead, the builder will deduct the sum from the final balance due. The offer of incentives will ultimately depend on how popular the plot or estate is.