New Year, New Build

Once upon a time the words “new build” might have triggered images of numerous small studio apartments crammed into soulless high-rise tower blocks, but the face of residential development in London has undergone substantial transformation over recent years.

Luxury schemes designed by award winning architects boast state of the art tech and interior design and concierge services now range from a 24-hour desk in the entrance hall to partnerships with well-known five-star hotels offering amenities from dry-cleaning to private dining and much more. As well as the wealth of facilities offered in these high-end residential developments (which continues to grow and diversify as developers look to set themselves apart from their competitors), new schemes are carefully planned and branded by their creators, often drawing inspiration from local residents, architecture and businesses. “Placemaking” is a must, and there is increasing pressure to forge new communities, not simply new homes, attracting both domestic and international buyers and investors from all walks of life.

From a logistical perspective, new build properties are generally “chain-free” so there is no dependency on other sales/ purchases further down the line which might potentially delay the transaction. This makes it incredibly attractive to occupiers and investors alike.

“Off-plan” vs “build complete”

One key advantage of purchasing new build property is that it can be bought prior to construction. This can be preferable, particularly for overseas purchasers who may not need to have use of the property immediately, or buyers looking for first choice of the apartments on offer. It can also be attractive to those looking to purchase a portfolio of apartments within the same building/scheme.

Often the deposit structure can be more lucrative as it involves transferring a proportion (usually between 10% to 30%) of the purchase price generally over a period of 12 – 24 months so allows the buyer time to organise international payments by way of planned “stage payments”.

It is of course also possible to purchase a new build apartment which is “build complete”, i.e. ready to move into. There are subtle differences which are briefly outlined below.

Instructing a lawyer

Whether purchasing off-plan or build complete, it is fundamental to engage the right advisors in order to ensure a smooth and seamless transaction. New build properties are understandably desirable for a number of reasons, but they require thorough legal checks and careful reporting. There will often be a complex title to review, a large number of planning documents to check and more sophisticated contract paperwork in comparison to a second-hand purchase where the contract would likely be predominantly based on the UK’s Standard Conditions of Sale. It is therefore important to choose a law firm who are not only experts in residential real estate but well acquainted with new build property transactions. It is also worth considering law firms who have specialists in planning and construction, particularly if you have intentions to reconfigure the apartment layout, or amalgamate one or more apartments on completion.

Tax considerations

When investing in UK residential property, it is vital to ensure your tax position is assessed prior to exchange. If purchasing off-plan and completion is some years later, it may also be worth obtaining refreshed tax advice. Aside from stamp duty land tax (which is in itself a minefield requiring careful guidance), a good tax advisor will be able to provide bespoke advice on the most efficient way to structure a property purchase from an inheritance tax, income/ corporation tax and capital gains tax perspective, as well as assisting with any pre-arrival tax planning which may be required if the purchase is for the purposes of relocating to the UK from another country.