2 February 2022

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.

Off-plan Build complete
Apartment selection
  • Made based on architect’s plans and CGIs
  • Often at the time of, or following a, “launch” during early stages of development
  • Due to early stages, wider selection of apartments available to choose from

  • Made based on visit to site and (hopefully) apartment itself
  • Have the benefit of seeing the finished article
  • Depending on developer’s sales model, there may be a limited choice of apartments left

Reservation
  • Heads of terms agreed and holding fee paid

  • Heads of terms agreed and holding fee paid

Contract
  • More detailed due to the property not yet being “finished”
  • Scope for variations between exchange of contracts and completion

  • Should be simpler as the property is being “sold as seen”
  • Snagging list and inventory of fittings and contents should be attached

Deposit structure
  • Generally, 5-10% on exchange followed by one or more “stage payments” payable on specific dates

  • Usually 10% on exchange

Variation
  • Estimated area of the property (usually 5%)
  • Internal layout and plans
  • Planning permissions
  • Estimated completion dates

  • Rarely any as property is sold as seen
  • Snagging items (minor defects) should be remedied pre or ASAP post completion

Financing
  • Depending on lender, often subject to the market at the time of completion (not exchange)

  • Valuation often carried out and offer obtained prior to exchange

Completion
  • Usually on 10 – 20 working days’ notice

  • Fixed date agreed between buyer and developer

Warranties/guarantees
  • 10-year new home warranty should be given on completion
  • Most developers hand over guarantees for white goods on completion

  • 10-year new home warranty should be given (commencing when the apartment was certified complete so may have already started running)
  • Guarantees for white goods (may have started running)

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.


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Moving to the UK is an exciting life event whether it be a short-term move for work to explore business prospects or a more permanent relocation with the whole family; the UK offers an eclectic range of options to live, work and learn, from the cityscapes of London to vineyards in the English countryside and historic university towns in-between. Setting up life in a new country can feel daunting too and it can be difficult to know where to start.

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