Guide for First Time Buyers

WELCOME TO OUR ULTIMATE FIRST TIME BUYERS GUIDE

Buying a new build property is an extremely exciting time in someone’s life and it is one of the biggest financial transactions you are ever likely to make. As many purchasers of new build properties are first time buyers, the process can be somewhat daunting, so that is where this guide comes in. We break down all the steps involved in buying a new build so that it is very clear how to get things moving on your journey to a new build house purchase.

Where to Begin with New Builds

Just like with the purchase of any property here in Ireland, you will have to demonstrate to an agent in charge of selling the property just how you plan on financing the purchase of the new build. This is referred to as proof of funds. Depending on the source of your finance (cash, mortgage, cash/mortgage combination) some form of documentation will be needed for the agent to verify your eligibility.

GETTING FINANCE TO BUY YOUR NEW HOME

When buying a new build, thankfully there are a number of government financial supports to help you along the way. An attractive consideration with buying a new house is, as you will be its first owner, you will avoid or reduce one of the biggest uncertainties of purchasing - the property chain. Even if you are selling your existing home, the chain only goes upward, which is attractive to buyers as it is one less link in their own chain. 

Keep in mind also whether you can take advantage of the ‘Help to Buy Scheme and First Home Scheme’:

Help to Buy Scheme

The Help to Buy scheme is a tax relief for first time buyers that they can use towards the purchase of their new home. It can be used for properties that are priced up to €500,000.

First Home Scheme

The First Home Scheme is available for buyers who need up to 30% of the price of a new home to put with their mortgage approval amount and their savings. It bridges the gap, allowing them to be able to buy. The First Home Scheme is provided by the State.The amount paid by the State is then paid back over a number of years depending on the amount. The State then owns a stake in your home. For more detailed information on the Help to Buy Scheme and the First Home Scheme, click here.

Finding New Developments

Begin your search as wide as is possible by setting up email alerts on Daft or on MyHome.

You can use Google to search “New developments [ locality / area you’re interested in ]” and you will then find that developers will have individual websites just for new build developments. You can browse those websites and then crucially register your interest.

On these developer websites, you will find a static site plan, floor plans as well as specifications of the various house / apartment options. You might also discover details of release dates of new phases. “Phases” is a term you will see relating to new build developments. Builders and developers tend to release initial phases; they might release subsequent phases a number of months or a couple of years afterwards. Each phase will typically include a number of different property types e.g. three bed end of terrace, two bed mid- terrace, three bed semi-detached, four bed detached etc. but it varies from development to development. You can study the relevant site plan to see the details.

How to choose an area to live

Choosing an area to buy a new build may be obvious if you are from the area yourself but a lot of people are in the position of not having a specific affinity to a location. They may originally be from overseas or from another part of the country and they might have relocated for work reasons. As a result, they might need guidance on where to find a new build development. Here are some tips:

• Commuting Distance-Factor in your work or school commute; is it going to be achievable and affordable on a daily basis.

• The neighbourhood- scpoe out your proposed neighbourhood at different points during the day and at night to ensure that there are no issues with traffic congestion or antisocial behaviour etc.

• Public transport- check out the neighbourhood’s public transport options. Think of possible future changes that may occur such as potential school or university attendance or a change of work location where parking may not be an option.

• Local amenities it may become important in the future and that your home is close to local amenities like preschools, schools and shops, so, if such amenities are not already established, look into the future plans before discounting any potential area.

Buying off the Plans for a New Development

Check the builders and developers’ track record. Check their company website and you should see previous developments that they have completed. You can do a Google search on their name and see if it throws up any pertinent issues on forum sites or within Facebook Groups for example. However, be aware that some sentiment about developers can be subjective so read into it objectively and arm yourself with the information.

Note that your floor plan room measurements may not be provided. When buying off plans you might only be given the overall property measurement and not the individual room measurements. This is to avoid any issues once your property is built as there may be slight differences in room configurations to your finished property.

• Be aware of the orientation of the property you are buying off the plans. A house with a garden that faces south or west is optimal in that you will have long periods of sunshine to enjoy in the afternoon and evenings. Gardens are generally indicated in the site plan (in general the length of a garden of a new development is approximately 11 metres) but always ask your agent for a landscape plan or building site plan which shows your exact boundaries in order to confirm your own garden plot; furthermore, confirm if kerbs, paving, grass seed is included in front and back gardens where applicable.

• You should ask the selling agent about proposed completion dates and property numbers. The agent will be able to give you this important information giving you have an insight into when you will be able to move in. Ask the agent about how many homes there will be in the final stage of the development, you don’t want that to be a surprise for you. You can also ask about possible future amenities that may be planned e.g. playgrounds etc. It is also worth noting that up to 10% of all new build developments are now dedicated to social housing; every development will be different so ask the agent about the agreed allocation in your housing scheme.

• Management fees and parking arrangements. Find out any management fees involved for your proposed property. Different development management fees will cover different things, so for example some might include the bins and waste collection but some may not so it is important to establish this at an early stage. If you own a car(s), get confirmation regarding parking arrangements in the development – ask if your property has a driveway and will there be extra parking on the site for excess vehicles.

• Find out the standard fixtures & fittings and ask about customisation possibilities. You can ask for a list of approved suppliers and then you can view the standard fixtures and fittings; you can also have a look at the “extras” to see if you want to raise your budget to customise.

• Consider the location your property and where will it be in the development. If you buy at the early stages of the development e.g. phase 1, yes you will be closer to the entrance and/or exit of the development but equally, you may have a growing amount of passing traffic as the rest of the phases roll out. If this is very important to you, i.e. a quieter spot in the development, consider these elements carefully.

Choosing your property Solicitor

You will need to appoint a solicitor to take care of the conveyancing (legal formalities surrounding the purchase of a property). This solicitor then communicates on your behalf with the builder’s solicitor and is your point of contact for any queries you may have.

Importantly, you will need to choose a property solicitor with knowledge and experience who understands your needs. The process is standard across the country, but the help and expertise of a proactive, experienced and engaged solicitor can make all the difference. It’s important to appoint your solicitor at this stage as your agent will soon be asking for their details.

A starting point is to ask for recommendations from friends and family and search online for property specialists in your area. Narrow down a shortlist to 3 and then get in touch with each one individually. When choosing your solicitor, the three key questions you need to ask:

·         Has your company got a dedicated conveyancing department and if not, what level of experience do you have? While a firm with a dedicated unit may ensure a smoother process, a good personal connection with a solicitor is paramount

·         How do you calculate your fee? Some charge a flat fee and others require a percentage of the sale price, so ensure you confirm this with them in advance

·         What information do I need to provide you with? An experienced solicitor will make you aware of what information and documents you will need to gather to get the process started.

Reserving your Home

You are mortgage ready, have selected your solicitor and most importantly have settled on the right development and style of house you want to purchase. You are now ready to reserve the property. As soon as you have agreed with your estate agent the home you wish to reserve, you will pay a booking deposit, which can be organised through a bank transfer, bank draft, cheque, or on-site credit card payment. Booking deposits are usually between €5,000 and €20,000 and are fully refundable up until a contract is signed. With your reservation is accepted, it will be subject to ‘contract/contract denied’, meaning it is not legally binding until contracts are signed by both purchaser and seller. You can now notify your bank, and solicitor of your potential purchase. Once the deposit is paid, the property is officially ‘sale agreed’.

After you have given the agent your solicitor’s details, contracts will then be issued on receipt of your deposit, it’s important to let your solicitor know to expect them. Be mindful that contracts need to be signed within 21 days of issue. If you will be drawing down a mortgage, the valuation and loan-offer process needs to be understood and acted upon.

5 steps to valuation-and-loan-offer for new mortgage holders

1. Inform your bank or lender of the address of the home you have ‘sale agreed’, remembering that you will be required to present your full mortgage approval from your chosen bank before signing contracts

 2. Your bank will then arrange a bank valuation, choosing from a panel of independent valuers, on your behalf to assess the site. This is done to make sure the property is of sufficient value to be used as security on the mortgage

3. When this has been completed, the valuer will usually contact you directly in order to secure payment for the valuation, which costs approximately €150 plus VAT. This figure can vary from lender to lender and should be clarified with the valuer in advance

4. When the payment is received by the valuer, they will email or post to you, your solicitor, and loan provider the copy of the valuation

5. This will result in the full loan offer being approved by the bank, and you will receive a ‘Letter of Loan’.

Signing contracts and payment of contract deposit

This is often the part that people find confusing. After you reserve your home, the builder’s solicitor will forward the contracts to your solicitor. Your solicitor will review your contracts and respond to the builder’s solicitor with pre-contract queries on your behalf, should you have any. You can also take this opportunity to query any legal issues with your solicitor. It is important to keep in touch with your solicitor on a regular basis to seek updates on contracts and queries. You will also be  required to have life assurance in place before signing.

Signing the contract and paying the contract deposit

1. When all the queries have been answered and paperwork is in order, your solicitor will make an appointment for you to sign contracts. If you are unable to sign contracts, you need to organise a power-of-attorney with your solicitor or third party

2. At signing stage, you will need to pay your contract deposit, and this amount can vary between developments. Some require a percentage of the value of the home, less the amount of your reservation deposit, and others have a set fee. The builder or developer usually sets these deposit amounts

3. Now that you and the developer have signed contracts, you are officially ‘exchanged’. Any questions you may have about the build of your new home should go through your solicitor.

Completing the final stages of the build

You are getting extremely close to completion and construction is already well underway. Before you sign your contract, you will receive an indication of an estimated completion date. You should keep in touch with your estate agent and solicitor after signing the contracts, and throughout the build, to make sure you are kept informed on any updates on completion timelines. Then, once your contracts are signed by both parties, you are in a legally binding contract with the builder. If there is any delay, you might need to secure an extension on the mortgage approval. In this situation, make sure you give your mortgage broker or lender notice in advance and they can advise of the next steps in extending your loan approval. There are tasks that will need completing at this stage and it’s important you are aware of and understand what needs to happen and why.

Three key tasks that have to be completed at this stage

1. BCAR – once your home is completed, it needs to go through various tests to achieve BCAR Certification (Building Control Amendment Regulation). The builder will organise this and pay for it, and it will act as an instruction to the local council or authority to check that the site is liveable, that all roads and facilities are in place, and electricity and water are connected up.

2. BER – this is now compulsory for all new homes, a Building Energy Rating (BER) Certificate is an indication of the energy performance of a home. A BER report has to be compiled by an independent energy specialist on behalf of the builder who will also cover the cost. This assessment will confirm the official BER rating of the property.

 3. Snag List – now your new home is complete and all certificates issued, the builder’s solicitor will issue a completion letter to you and your solicitor. Your new home is now ready for inspection, also known as ‘snagging’. You can then engage a surveyor to ensure all work has been carried out to an acceptable standard, as well as highlighting any issues to the builder, for example the standard to which the property has been completed. If you engage a professional, you will need to pay them directly but it is also something that you can do yourself

Closing the deal and final inspection

You’re almost there, and once the snag list has been finished to your satisfaction, you must notify your lender or broker. If you are taking out a mortgage, they will arrange for the funds of your mortgage to be issued to your solicitor’s account ready for closing the sale. When your initial inspection or snagging has been completed, the builder will contact you to carry out a ‘pre-closing inspection’ to make sure the home is left in ‘move-in condition’ and to confirm the closing date.

 Final steps to home ownership and moving in

1. Some lending institutions will require a second bank valuation to let you drawdown the mortgage. You should notify your lender once you have snagged, for them to arrange a final valuation

2. Your mortgage and life insurance will also need to  be in place

3. Keep in mind that you should arrange transfer 3-5 days in advance of your closing date as it can take a full working day for closing funds to transfer from your account to the vendor’s solicitor account. In some cases, a direct debit mandate must also be completed before the loan is released and your solicitor can advise you on this

4. The remaining balance of the purchase price will be paid upon close of sale. If you are a cash buyer, this is the entire value. For mortgage holders, it is the balance of your funds, as agreed with your lender

5. Service transfer and key collection - once the sale has closed, you will be given all relevant meter readings and details of the utility providers. You should open your new utilities accounts within 10 days of taking ownership. Last but not least, it’s now time to pick up your keys from the site office That’s it! You have successfully bought a brand new home and can look forward to many happy years ahead.

That’s it! You have now successfully bought a brand new home and can look forward to many happy years ahead.

Upcoming Developments