I have a pretty strong rule about new builds. When clients are looking to buy properties in London, I seldom recommend buying a new build property.
There are several good reasons I discourage people from buying new build property:
- Price: Usually these are overpriced – like when you buy a new car which loses value as soon as you drive out of the showroom – developers like to charge a premium because of the “newness” of the unit. Beware the glossy brochure!
- Square box syndrome: Often, each unit lacks individuality – if you’re one of many in the same building and there comes a time when you want to sell or rent the unit, it’s usually one of a few others competing in the same block.
- Service charges: These are usually quite high as the blocks have gyms, swimming pools, lifts, concierges etc – this bumps up your annual maintenance fee.
However, occasionally, there are times when this rule can be broken
- If you’re the first person to buy in a new build block – you may get a discount as the developer wants to get some momentum going on the sale of the units
- If you’re one of the last people in the block to buy – when they only have a few units left, you can get extra “perks” – eg a furniture pack/they cover your stamp duty. The developers at this stage are very motivated to sign off on the development and they will take discounted rates.
- When you buy a reassignment contract within a new development from a previous buyer who for some reason doesn’t want to or cannot complete on the unit – meaning you can get a discount. This is also known as a “distressed sale”
In August, I was able to take advantage of number three in the above list – a distressed sale scenario.
How the new build opportunity came about
My client was looking for a 3-bedroom property with good views that they could use part-time during the week. They wanted a turn-key solution (without having to renovate), good security (a concierge), and outside space.
It looked like a new build was ticking all the boxes.
I identified a few buildings and visited a developer to arrange some viewings. I put the word out that we were looking at units that matched these criteria. From an old contact of mine, I got a tip about an off-market unit whose owner couldn’t complete on the sale.
The property had already been sold to another buyer who had already exchanged (and paid a deposit) but due to unforeseen circumstances could not pay the final balance and therefore could not complete on the purchase.
The situation was time sensitive – because legally, the original buyer had to complete in time and pay the full balance, he needed someone to take over the contract. Any buyer would have to complete on it within two weeks as the developer had already served notice to the present buyer.
The developer was advertising identical units one floor above and one floor below at £2.5 million. This unit was being offered at only £1.75 million.
In this case, the unit was on a very high floor and had stunning southerly views over the skyline of London.
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Naturally, the attraction for us was that we were picking this up at ca £700K below the normal advertised price for similar units in the same block. And who doesn’t love a bargain like that?
Evidently we weren’t the only ones – as soon as we put in the offer, another buyer also made an offer. In situations like this, you need to be well organised and prepared. It was put to us that whoever could exchange contracts first would get the unit.
Luckily my buyer was extremely motivated, had finance in place, and a good conveyancing solicitor on board. We soon became the preferred bidder and so we were able to complete on the sale in time at a whopping £700K below current advertised rates.
Only 1 month after my client first contacted me they got the keys to their brand new home which ticked all their boxes, at a fantastic price. Another happy client, another “astute” win for me – this is why I love my job!