Know your numbers when buying a new build

If you’re planning to buy a home, it’s important to look beyond the sale price and consider the associated buying and running costs before you set your heart on your dream home. One advantage of new build homes is that some of the initial costs can be easier to determine upfront. That’s partly because builders operating under the Consumer Code for Home Builders are required to include details of costs that may be associated with a new build home. New homes also come with a warranty which can often cover unexpected defects without impacting your wallet.

In this blog we’ve outlined some of the main things to be aware of when preparing to finance your new home.

Before you start looking

Find out what you can afford. Most builders and agents strongly prefer you to have finance in place, or a mortgage agreement in principle, before you reserve a property.

Don’t forget to allow for purchasing costs. All home purchases incur unavoidable costs. You will need professional advice from a solicitor or licensed conveyancer to make sure you fully understand and are happy with the contract you are signing. In most cases, you will also need to pay for land searches to check for any other planning applications or other issues that could affect your purchasing decision. Depending on the value of your home and your circumstances, you may also need to pay stamp duty, which typically ranges from 2% to 12% of the total property value – full details are available on the government’s website. Builders may cover this as an incentive but it’s important to check as it can be a significant additional cost. You will also need to insure your new home, usually from the point of contract exchange, although some builders may cover you until legal completion.

Understanding new build costs

New build homes come with many advantages and can often cost less to run due to effective insulation and up to date building materials. The Home Builders Federation has produced a handy guide to running costs compared with older homes to help you https://www.hbf.co.uk/research-insight/watt-a-save-2026/. While running costs may be lower, the nature of new community spaces can mean there are some additional costs to consider: 

• Management services (factoring in Scotland) for shared amenities. Housing developments often include landscaping, parks or playgrounds, as well as roads and streetlamps which need to be maintained. In many cases, builders will seek to get these amenities adopted by the local council, meaning their upkeep will be covered through council tax and done by the council. However, this is not always possible and long-term maintenance may fall to residents. Ask your builder who will be responsible for what. If residents will be responsible, your builder must provide an estimate of the likely costs.  
• Leasehold management fees. If you are buying a leasehold flat (or similar), your home will normally incur management fees. These will typically be collected by a management company or committee and may be paid to a managing agent who will be responsible for organising the cleaning and maintenance of common parts such as stairwells and lifts, as well as buildings insurance and maintenance of the external structure. Leasehold management fees may also apply to gardens or parking areas. Ask your builder what the costs are expected to be and the arrangements for appointing managing agents. Check whether residents will be expected to become directors of the management company.

It’s worth noting that the government is planning to introduce changes to leaseholds which may impact how communal spaces are owned and maintained. However, the likelihood is there will continue to be costs for home owners to keep these maintained.

• Event fees. Some residential leases may charge fees for certain events, for example if you want to sub-let or sell your property. These fees can be referred to in different ways, such as exit fees, transfer fees, deferred management fees, contingency fees or selling-service fees, but in all cases, your builder should inform you of what those are and an estimate of the cost.
• Utilities and broadband tie-ins. Your builder may have negotiated a tie-in with a broadband provider and/or utilities companies. In most cases you can change these after you move in, but broadband may be subject to a minimum term. Ask your builder to clarify any commitments and how long they last.
• Built-in equipment costs. Many new homes come with an alarm system which may include a call out or monitoring service. These are typically covered for an initial period but check what the ongoing costs would be and the options available to you when the initial term ends. If you have shared heating systems, air-source heat pumps or other similar facilities that will require ongoing maintenance, ask your builder about the expected costs and how these will be managed.

Once you’ve had all the relevant discussions with your builder, don’t forget to make an additional allowance for removals, home insurance, and buying a few essentials to help you get settled in.

Although this may seem like a long list, the good news is that your builder is required to provide an indication of what many of these items will cost which will help you plan effectively. Comparatively, second-hand homes may also come with some or all of these costs, as well as unexpected maintenance and repair expenses. Knowing your numbers upfront can help you feel more in control throughout your exciting and significant home purchase.