Thinking of buying your first home? There are alot of important factors to keep in mind, to ensure that you will get the property you want, and for the best price. In fact, despite property prices shooting up 6.5% since June, which is the strongest five-monthly gain since 2004, there are savings to be made right away on your purchase!
Activity in the housing market changes throughout the year, and there are opportune moments and dips every year, that put buyers in a stronger position than they would be in at other times. If you time your new home search just right, you can end up saving thousands of pounds, just because you bought at the right time of year. But of course, there can be some drawbacks to waiting too long which we’ll come onto later.
Winter Market Slowdown
Most buyers come out of the woodwork in the spring or summer. Partly because of the longer days which helps with viewings after working hours, but also due to the school calendar year, as there is a knock-on effect to tenancy start and end dates, which in turn, has a downstream effect on the sales market.
During the summer months, developers are less likely to accept discounts, with activity peaking around July each year. Conversely, during the quieter winter months, developers are more likely to settle for lower offers if they expect to maintain consistent levels of sales throughout the year. This reduced competition will give you extra leverage when you are negotiating, as most people will be thinking about postponing their search until the new year in the wind down to Christmas. In fact, one of the best days of the year to buy is on Christmas Eve, where you can be sure, there will be few offers submitted between then, and the new year.
Developers Financial Year End
Buying a new home that is scheduled for completion just before the end of the developer’s financial year or to a lesser extent, half-year, often puts you in a good position to ask for a discount if you can “complete” the purchase on or before the year-end date. You may also be able to negotiate some incentives such as stamp duty, a furniture pack or legal fee contributions. Don’t forget though, if you are buying with a mortgage, you are at the mercy of the bank and so agreeing to fixed deadlines without consulting a mortgage broker could cost you in the long run.
Buying Off-Plan
Consider buying off-plan - The current Help to Buy scheme comes to an end in March, which happens to coincide with the stamp duty holiday coming to an end. Naturally, buyers have been rushing to secure homes, which are eligible for the current Help to Buy scheme. This is exacerbated further, due to the fact that the new scheme launching in April is for first time buyers only, which means that anybody who has owned previously, will no longer be able to apply. Buying off-plan might mean a leap of faith in terms of understanding the property layout, but the options available will open up significantly.
Buying a home in the early stages of a development in a growing market, can result in your new home increasing in value during the period of construction which can be up to nine months with Help to Buy, and up to 4 years without.
Developers will often seek out buyers prior to the show home launch, as it can sometime be a requirement of their funding partner, who will want to see reservations before releasing funding to start the next phase of the build. These early reservations will also set a precedent, and give other buyers confidence that the development offers good value. Once the show home is opened it is usual for headline prices to be raised, or for discounts to be reduced. However you will be able to see the build quality and specification, and get a “feel” for a typical apartment layout - something which many buyers simply cannot commit to without seeing.
Reserving before the plot or development is officially released
An 'early-bird' reservation is different, as you are pre-reserving a particular plot without the price being released. You are then given first refusal on this plot when it is released for sale. Developers normally release plots for sale a few at a time in a certain order. This is because they need the development to be completed in a particular sequence, usually for pricing, presentation, access and safety reasons. Keep in mind the price subsequently released could be higher, as the builder will already know he has interest in that particular plot.
Of course, as with any advantage, waiting for the absolute perfect time to act comes with its own disadvantages. For instance, stock availability could be an issue where the best apartments were reserved during a peak time in the year, or the completion date might not align perfectly with your tenancy expiring. Changes to stamp duty or tax rates will also create peaks and troughs in the markets calendar cycle. Developers will be equally mindful of these shifts in additional costs for buyers, and so it’s worth asking your agent whether the developer is willing to cover for instance, the increased stamp duty should the purchaser be liable.
Chameleon Group offers buyers access to new developments before they reach high street agent branches or even Rightmove or Zoopla. We empower our buyers to make smart buying decision earlier in the construction cycle. For updates and notifications on new homes coming up in your area sign-up to our notifications today, or check out our new homes.
