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Investment Property

Looking to buy a new home? At any one time, the New Homes Department will have a broad selection of new or refurbished homes from which to choose.

Buying a new home is a little different from buying other homes. The most important difference is that an exchange of contracts is usually required 3 weeks from reservation. This can be quite a constraint, especially if you have a home to sell and are dependent on the sale to buy.

To reserve a new home, a fee is normally payable to the developer, usually between £1,000 and £2,000, which is then set against the monies required at exchange of contracts. This is usually 10% of the agreed purchase price. Some developers may ask for additional stage payments.

In exchange for the reservation fee, the developer agrees to take the property off the market for the 3 week period. It is important for your solicitor to be aware of the date to exchange, as developers are often quite firm about the dates agreed. Our advice is that if you do encounter difficulties, always communicate these to the developer through your solicitor as quickly as possible.

Other points to consider when buying a new home are timing – when do you want to move? If buying a long time ahead of build completion, you will effectively be buying “off plan”. The advantages of buying off plan are mainly to do with price. One would hope that, if you purchase one or two years ahead of completion, that the value of the property will rise over this period. Given that your commitment at exchange is 10% of the agreed purchase price, any increase in value over the time before completion will enhance the value of your investment. However it is important to keep in mind that values can go down as well as up!

If you would like to discuss any of the above, call our New Homes department direct on 020 8209 9399.