Guide To Buying A New Build Property In Central London

Newly built properties have a lot to offer. Purchasing a home in walk-in condition in prime central London is a tempting prospect, whether you are a first-time buyer, looking for a family home or planning to downsize.

Consider West Hampstead Central’s baked-in community feel, Park Modern’s Hyde Park views, the exclusivity of Chelsea Barracks, and the luxury investment prospects of £2 billion development 1 Mayfair. There are many benefits of buying a new build, but there can be potential downsides too.

Read our guide to buying a new build home near locations like Regents Park, Fitzrovia, Hampstead, Bayswater or Kensington to find out more about the process.

What Is A New-Build Property?

A new-build property is one that is newly built and has never been lived in. If you are buying a property where work hasn’t started on the development, or the property is in the process of being built, this is called buying ‘off plan’.

Why Buy A New-Build Property?

There are many advantages to buying a newly built property, rather than an older one.

• Repairs and maintenance costs should be minimal for the first few years.
• Energy bills should be cheaper because the property will be better insulated.
• New properties often come with guarantees. If the property is registered with the National House Building Council (NHBC), it will come with a 10-year warranty.
• Buyers can often select the fixtures and fittings.
• If you need financial help, the government has several schemes that can help you purchase a new-build.

Want to find out more? Discover what buyers and renters want and find out whether you need a home buyer’s survey.

The Process Of Buying A New-Build Home

1 Check Your Finances

Talk to a financial advisor or your bank to establish how much you will be able to borrow. This will help you understand how much you can afford to spend before looking at properties. The mortgage process can be more challenging as lenders tend to offer lower loan-to-value ratios on new builds, and your mortgage in principle may expire due to delays.

Make sure you set aside money for the buying process itself, such as paying solicitors fees and stamp duty.

2 Find A New-Build Home

The next step is to find a development you like. Research the local area to ensure it has all the amenities you require as well as the developer’s track record for delivering high-quality properties on time. Confirm that the builder is a member of the National House Building Council (NHBC). The NHBC require their members to build to a high standard. You will also receive a ten-year guarantee and an insurance policy to cover any major problems regarding the new building.

Most new developments will have a show home to illustrate the quality and finish of their properties. Find out what is included in the price, for instance, built-in wardrobes, flooring and white goods. Be wary of add-on items; you may find it cheaper to source and pay for them yourself.

Many developers will hold an open day. These often come with incentives such as paid stamp duty, help with moving costs, or part-funding of deposits.

3 Beware Estate Management Fees

It’s increasingly common for property developers to build estate management fees into the title deeds, on top of council tax and service charges. Management fees cover the upkeep of communal areas including private roads, gardens and car parks.

Check the fine print thoroughly, as if they aren’t covered under consumer rights, there’s no dispute resolution service, and this may concern future buyers if you sell.

4 Put In An Offer And Pay A Reservation Fee

Like any house price, the price advertised is only an asking price, so you should be prepared to negotiate. Often, deals are available at the beginning of the development or when only a few properties remain.

Compare the price of the new build home price to similar ‘old’ houses in the area that have sold recently. Check the price per square foot to get a rough idea of any premium you are paying.

If you can’t negotiate on price, ask the developer to pay your stamp duty or throw in freebies such as flooring or furniture.

If your offer is accepted, you will need to pay a reservation fee. The cost varies, but it is normally around £1,000 and will be deducted from the deposit payable on exchange.

If you pull out, you will lose your reservation deposit.

5 Start The Legal And Financial Process

Appoint a conveyancing solicitor to deal with the legal aspects of your purchase. The legal side of buying a new build is more complex than other types of conveyancing, so it is advisable to choose a solicitor with experience of this.

The process can be longer too. The solicitor must check the builder’s planning permission, adherence to building regulations, utility connections, and plans for maintenance. They will also arrange to exchange contract and establish a completion with the developer’s own conveyancing solicitor.

At this point, you can start the process of applying for a mortgage.

6 Exchange Contracts And Pay Your Deposit

You will usually exchange contracts months before you move into a newly built property. At this point, you will be required to pay a deposit, usually between 10% and 30% of the purchase price.

7 Wait For Your House To Be Ready

Your builder will give you an approximate completion date, but this may be subject to delays the developer has no control over – the weather being the main culprit.

Significant delays can be a problem as you risk losing your mortgage offer. Most mortgage offers are valid for six months. Ideally, get the developer to agree to a ‘long stop’ date. If they don’t finish the property by this date, you will be entitled to compensation.

8 Book A Snagging Survey

Try to have a snagging survey conducted to identify any issues with the property as soon as possible. It takes around 4 hours, costs £300-£600 on average, and takes in everything from drainage and roofing to poor paintwork and sticky door hinges.

Ideally, the snagging survey should take place before completion as you’re in a stronger position to negotiate a quick resolution, and clearly aren’t responsible for scratched surfaces or plumbing issues.

9 Get Ready To Move In

When your new home is ready to move into, your solicitor will arrange for your mortgage lender to release the funds and take the necessary steps to complete the sale. On the day of completion, you will receive the keys and other paperwork such as logbooks, manuals and guarantees. Make sure you understand the process for reporting any defects.

New Build Mortgages

You may be charged a higher interest rate for a mortgage on a new build property. This is because lenders see these mortgages as riskier due to the possibility that the property’s value may fall in its early years.

Some lenders set a lower maximum loan to value ratio on new build mortgages, so you might find you need to save a larger deposit.

Timing can also be an issue as mortgage offers tend to last for six months. If the development takes longer than this to complete, you may need to re-apply for the loan. If your financial circumstances have changed or the property’s value has fallen during this time, you may find it harder to resecure a deal.

What Schemes Can Help Me Buy A New-Build?

The government’s Help to Buy: Equity Loan Scheme ended in March 2023, but you may qualify for help with the price of buying a new build property through these schemes.

First Homes Scheme

First-time buyers can get a 30% to 50% discount on the market value of brand-new homes from the home builder, or resold but originally bought through the same scheme. You must meet eligibility criteria, for instance, your household income can’t exceed £90,000 in London, and local councils can set further restrictions. Also, the property must cost no more than £420,000 in London under the eligibility criteria for this scheme. You must also have a connection with the area you are looking to buy in, such as growing up there or family living there.

Shared Ownership

A shared ownership scheme allows you buy up to a 75% share of the property’s value with a mortgage and rent the remainder from the developer or housing association. However, you’ll have to pay ground rent and service charges and follow certain rules. It is usually possible to increase the amount of the share until you own the property outright.

Own New Rate Reducer

The Own New Rate Reducer scheme makes it more affordable to buy with full ownership by bringing down your mortgage rate. Participating developers contribute a percentage of the property’s purchase price on qualifying homes.

Want to know more? Take a look at renting vs buying a house and second home mortgages.

Deposit Unlock Scheme

The Deposit Unlock scheme is open to first-time buyers and existing owners who are moving home and buying a new-build. Only offered by mortgage brokers, the scheme allows buyers to purchase a brand new home with a 5% deposit.

Help To Build

There is also a government scheme to help people who are looking to build their own property. The government’s Help to Build Equity Loan Scheme includes up to a 40% equity loan top up in London, with the self-builder required to put down at least 5% deposit.

Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme was due to end in 2023 but has been extended to 30 June 2025. The scheme allows buyers to get onto the property ladder with just a 5% deposit, with the government guaranteeing a percentage of the mortgage to the lender to reduce the risk of providing higher loan-to-value mortgages.

Are New Build Homes Freehold Or Leasehold?

The rules on leasehold and freehold properties were updated in 2024, so read up before starting the buying process.

If you are buying a flat, it will normally be sold on a leasehold basis. A leasehold gives the purchaser the right to occupy the property for the period specified in the lease. Owning a leasehold property will typically involve paying ground rent and a service charge covering costs including buildings insurance, maintenance and repairs, leisure facilities, concierge services, or additional security. If you buy a flat in a new build, have your solicitor check the lease thoroughly.

But the Leasehold and Freehold Reform Act is ushering in clearer service charges. It also rules that newly built houses must be sold as freehold. Purchasing a freehold property gives the buyer sole ownership of both the building and the ground it stands on.

Hidden Costs Of Buying A New Build Home

When you are buying a new build home, you need to be cautious about any potential hidden costs that you haven’t accounted for. These are some of the hidden costs to be aware of:

• New build premium – When you buy a brand new home, you will usually pay a higher price than if you were buying a similar home that has already been lived in.
• Fixture and fittings options – Some developers will allow you to choose your own flooring, kitchen cupboards etc., but these will often cost more than the standard fixtures and fittings that are included. You should check what is included in the price, as some essential items such as carpets may not be included in the price.
• Landscaping – Many new builds do not include landscaping of the outdoor area and you will either pay them an additional premium for this or will have to complete the work yourself.
• Homeowner fees – If the property is leasehold, you will have annual fees to pay and you may also be required to pay estate management fees.
• Costs of delays – New build developments can often run behind schedule, which means you may need to move into temporary accommodation while you wait to move into your new home and pay rent.

Pros And Cons Of A New Build

To help you decide if buying a new build home is right for you, here is a brief summary of the pros and cons.

Advantages Of Buying A New Build Home

• Guarantee – new build homes come with a 10-year guarantee, which means if any structural defects appear in the first ten years, they will be covered by insurance.
• Consumer protection – most developers offering the Buildmark Warranty have to join a consumer code for new homes, which ensures that best practice is followed in regard to marketing and selling the property.
• More affordable – most of the government’s affordable housing schemes, such as the first homes scheme, only apply to new builds. Some home builders offer incentives too, such as paying for stamp duty or a cash payment towards paying the deposit.
• Good condition – repairs and maintenance should not be required as soon or as often as when you buy an older property, so over the first ten years, maintenance costs should be kept to a minimum.
• Energy efficient – new materials and standards mean your home is more energy efficient and therefore your energy bills should be lower than a similar older property.
• Personalisation – you can sometimes choose the fixtures and fittings if you’re buying off-plan to select styles and colour schemes to your personal taste rather than buying a property based on the taste of the previous property owner.
• No onward chain – this aspect can make the buying process smoother as there are no issues such as the seller pulling out if they can’t find a property or if their seller pulls out.

Disadvantages Of Buying A New Build Home

• Potential delays – the build may be subject to delays which can mean your mortgage offer expires and you would need to go through the mortgage application process again. Delays can be caused by a number of issues, such as a shortage of materials or tradespeople or the developers’ other projects may over-run.
• Risk of defects – there can be defects, snagging and teething issues with the property, and some developers are not good at fixing these promptly. If you are not happy with the snagging survey, you should get an independent survey to ensure all defects are recorded and logged with the developers to get resolved.
• Conveyancing challenges – the conveyancing can be more complex as there are so many variables to consider. If you are buying the property off-plan, conveyancing searches are more complicated as the building isn’t completed yet.
• Ongoing construction – if you are the first to move in, you may be living in a construction site with all the noise, dust, and mud that go with that environment. Depending on the size of the plot, you could have construction work going on for months or even years while the rest of the site is completed.
• Property size – dimensions may be smaller when buying a new build vs an old house, as developers aim to fit more properties into the plot. You may also have only a small outdoor area compared to older properties with more land.
• Hidden costs – buying a new build home involves asking the right questions on costs and fees from the outset. For instance, estate management services can rise steeply, so make sure that you request a full breakdown of costs regarding any ongoing costs which may be attached to your title deed.

Common Questions About New Builds

Do you need a surveyor on a new build?

It is not a legal requirement to have a survey on a new build but it is recommended, as even new build properties can have issues.

Do new builds lose value?

As you normally pay a premium for buying a brand new property compared to a similar property that has already been lived in, the value of a new build can often drop in the first few years after purchase. This is not always the case though and some new builds don’t drop in value.

Are new build houses a good investment?

Yes, buying a new build property is generally regarded to be a good investment, as there is minimal maintenance costs in the first ten years and the properties tend to have good energy efficiency, so energy bills are lower.

Do you pay stamp duty on new build?

Yes, if you are buying a new build over the stamp duty threshold, you will usually have to pay stamp duty. Some property developers offer incentives to pay a proportion of the stamp duty.

Are new build houses VAT exempt?

Yes, new homes that are for you to live in are VAT exempt.

How long does it take to buy a new build?

Typically, it will take around 4 months to a year for you to buy a new build. If there are delays on the development, it can take longer than this.

Can I extend a new build house?

It is usually possible to extend a new build house but you may need permission from the builder/developer for a set number of years. You will also need to check whether you require planning permission from the local authority.

Are new build houses freehold?

Not all new build houses are freehold, as some are leasehold. The new government has outlined plans to abolish leasehold for new flats through the Leasehold and Commonhold Bill. You should check with the developer whether the property is freehold or leasehold.

Are new build house prices negotiable?

Yes, it is possible to negotiate on new build house prices prior to completion. This is usually easier to do for the first set of properties that go up for sale and for the last ones remaining.

Are new build houses more energy efficient?

Yes, new build houses are generally more energy efficient due to modern construction techniques and designs, use of energy efficient materials and energy efficient appliances being installed.

And Finally

If you have further questions about the pros and cons of buying a new build in Belgravia, Marylebone, Paddington, Chelsea, Paddington Basin, Lancaster Gate, Earl’s Court or Camden – we can help.

Plaza Estates have many years of experience dealing with new build properties. If you would like help with buying a newly built property in central London contact us today.

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