20 November 2009, City A.M.
By Jeremy Hazlehurst
Purchasing a property from a developer is never an easy thing. Jeremy Hazlehurst asks three experts for their buying advice:
POLLY COLDWELL, DEPUTY EDITOR OF FIRST TIME BUYER MAGAZINE:
1) Ensure the property is big enough for your belongings. Check that there is somewhere to put your hoover, etc. Garages have shrunk as well: measure it to make sure your car fits.
2) New builds are rated for their energy, water and waste under the Code for Sustainable Homes. Check the rating to get an idea of the property’s energy efficiency and utility bills. A lot of developments now use solar power, which can bring down your bills substantially.
3) Housebuilders often offer incentives. Some are beneficial, such as George Wimpey’s 10 per cent deposit match, but others are gimmicks. Don’t be lured in by gym memberships or retail vouchers – a house should be able to sell itself.
4) Check the service charge. It’s often hard to see what you’re getting in return. Find out who is responsible for managing the building and ask what the service charge covers before you move in.
5) The quality of new builds varies depending on the developer and the specification. Talk to others who have bought on the same development or through the same builder and get their feedback. Unlike builders or estate agents, residents are likely to be upfront and honest.
CAMILLA DELL, MANAGING PARTNER OF LONDON BUYING AGENCY BLACK BRICK PROPERTY SOLUTIONS:
1) Check if the developer is in good financial shape. You don’t want to be buying from a developer with a likelihood of going bust. If the developer is struggling, you can use this to negotiate hard and get a good deal.
2) Check how many units are going to be built and where. Ask to see a full site plan. You don’t want to buy a flat with a great view only to have another building spring up in front of you.
3) Check where the affordable housing element of the development is going to be. If you are next door to this, it will affect the value and re-sale value.
4) Ask when completion is going to be and ask your lawyer to try and negotiate some protection if the developer doesn’t complete on time. Never use a solicitor recommended by the developer.
5) If you are obtaining bank finance then there’s a risk that the flat will be worth less than the original agreed price by the time it is finished. If this happens, the bank will only lend to you based on the value of the finished flat, and you might have to inject more equity. Try to agree with the developer that if the flat is worth less once completed, you can re-negotiate.
MARTIN BIKHIT, MANAGING DIRECTOR AT ESTATE AGENT KAY & CO:
1) Try to buy in a smaller development. When you come to sell it is less likely that there will be other similar properties on the market and it’s likely you can get a better price.
2) Beware of artificially low service charges – these often creep up over time, particularly if you have to pay for services such as lifts, a gym or a concierge.
3) Buy the best that you can afford in the development. A flat that has a better view and is on an upper floor will ultimately appreciate at a better rate.
4) Buy in an area where new builds a scarce. Your investment will benefit from a premium resale price in the medium term as it will still be the newest that is available. If something newer is going to spring up next door in the next 12 months then your new build will not be as attractive.
5) If there is car parking available always buy one, particularly if the number of flats exceeds the number of spaces available