Posted by Beth Heley, Senior Associate
10 ways new build homes can kick start the post-coronavirus property market
How can the new build residential property market lead the way in the whole market getting back on track? Here we look at ten reasons that makes accelerating new build construction, the right choice in this unprecedented time.
1. Media over the weekend reported some of the main players in the residential housing building industry plan to restart construction on sites. Taylor Wimpey announces on their website: “We are now starting the process of remobilisation of construction in a controlled and managed way, on some of our sites in England and Wales”. Medium size developers are bound to follow. Some smaller developers have managed to continue on sites were social distancing and materials allowed during the lockdown.
2. New builds sales are often agreed ‘off plan’, so pre COVID-19 interested purchasers often did not see what they were buying and did not ‘view’ the property. This makes adaptation to sales during COVID-19 less challenging than the second hand home market with online brochures, models, computerised images and other technology assisting.
3. Often newly released phases of large estates are highly anticipated meaning interested buyers already know they wish to buy on the estate and have done their research early in the year on the area, pricing and house types etc. Probably having viewed the show home pre-lockdown!
4. Mortgage valuations of new build properties in the course of construction meant a valuer did not always have a finished product to value so they are used to valuing based on desk top data and comparables.
5. When a buyer exchanges contracts on a new build purchase contract for an ‘off plan’ property, the contract will not have a fixed completion date and completion will be once the property is build complete. This often means the properties are sold to buyers in rented or temporary accommodation. This means that the completion date will inevitably will be after the lockdown and often the buyers do not need to move straight away or all on one day.
6. Completing on a new build property has the added benefit that no one has resided at the property before and the property would have been professionally cleaned in any event, leaving less cause for concern on COVID-19 contamination.
7. Developers selling properties with the benefit of new build warranties such as an NHBC Guarantee should sell using new build contracts compliant with the Consumer Code for Home Builders. Put simply, this means the contracts should have termination rights in the contract. This means that a new build property buyer would be able to terminate the purchase contract after the applicable time frame in that particular contract should the developer take too long to build the property.
8. New build properties are attractive to international purchasers. With the impending Stamp Duty Change still on the cards for next year for overseas buyers, ‘chain free’ purchases may still be the quickest way to secure property in England and Wales.
9. New build properties are attractive as rental units as they require little to zero finishing work before tenants can move in and are low maintenance to look after.
10. The existing Help to Buy scheme is due to end in March 2021. The scheme will be replaced but the criteria will change meaning the scheme from April 2021 will not benefit a wider audience as the current scheme. For example, the new scheme will only be available to first time buyers. There is still time for deals to be agreed with Help to Buy finance under the current scheme.
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