Buying a New Build Home from a Developer

This Article will help with queries for:
New build homes for sale
Buying a new build home
New homes from developers
Purchase new construction home
New build property buying guide
Pros and cons of buying from a develop
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Getting Your Finances in Order (Mortgage Ready)

Assess Your Borrowing Capacity:
Before you start house hunting, understand how much you can borrow. First-time buyers in Ireland can typically borrow up to four times their gross income.

Save for Your Deposit:
First-time buyers generally need a deposit of at least 10% of the property's purchase price. For example, a €300,000 home requires a €30,000 deposit.

Factor in Additional Costs:
Beyond the deposit, budget for other expenses:

Legal Fees (Conveyancing): 
These will depend on the purchase or sale involved. Email or phone us to get a personalized quote. 

Stamp Duty:
This is 1% of the purchase price for properties up to €1 million. The proportion over €1 million is charged at 2%

Valuation Fees:
Some lenders will provide you with a panel of recommended valuers. As always, it is best to shop around for the best price. 

Mortgage Protection Insurance:
This life insurance product is usually required by your lender. If you have a medical history, this could impact the premium you are charged. 
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Home Insurance:
Also required before mortgage drawdown. You mortgage bank will likely offer you a home insurance product. It is always best see what the competition are offering before accepting the banks offering. 

Local Property Tax (LPT):
This will start to accrue once you purchase is complete. The payment of stamp duty by your solicitor will also trigger the opening of a file for local property tax. 

Explore Government Schemes:

Help to Buy (HTB) Scheme:
This scheme provides a tax rebate of up to 10% of the purchase price (maximum €30,000) to help first-time buyers with their deposit for new builds or self-builds. You must be a first-time buyer, purchase a new build up to €500,000, have a minimum 70% loan-to-value (LTV), and live in the property as your primary residence for at least 5 years. Your tax affairs must be up to date.

You can find out more about the help to buy scheme here:
 www.revenue.ie/en/property/help-to-buy-incentive/index.aspx
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First Home Scheme:
This shared equity scheme helps first-time buyers bridge the gap between their deposit, mortgage, and the price of a new-build property. The government can contribute up to 30% of the property's value (or 20% if also using the Help to Buy Scheme). Buyers still need a minimum 10% deposit and a mortgage covering at least 70% of the property's value. There are no repayments on the government's share for the first 5 years.
You can find out more about the First Home Scheme here:
www.firsthomescheme.ie

Local Authority Home Loan:
A government-backed mortgage available through local authorities for new or second-hand properties and self-builds.
You can find out more about the Local Authority Home Loan here:
localauthorityhomeloan.ie/

Get Approval in Principle (AIP):
This letter from a lender indicates how much they could lend you. It's not legally binding but is essential before making an offer. AIP is usually valid for 6 months.

Consider a Mortgage Broker:
They can help you compare rates from various lenders and guide you through the application process.

Finding Your New Build Home

Research New Developments:
Use online portals like Daft.ie or MyHome.ie, and search Google for "New developments [your desired area]". Many developers have dedicated websites for their projects.

Register Your Interest:
Sign up for email alerts and register your interest on developer websites to be informed about new phases or releases.

Understand "Phases":
Developers often release homes in stages. Be aware of proposed completion dates for each phase.

Visit Show Homes:
This gives you a feel for the layout, finishes, and overall quality. Ask about the orientation of the homes (e.g., direction the rear of the home will face).

"Buying Off Plans":
If the property isn't built yet, you'll be buying "off plans." Request site plans, floor plans, and specifications. Be aware that room measurements might not be individual, only overall property measurements.

Check Developer's Track Record:
Research the developer's previous projects and look for reviews or feedback online.

Making an Offer and Securing the Property
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Make an Offer:
Once you find a suitable property, make an offer through the developer's sales agent.

Pay a Booking Deposit:
If your offer is accepted, you'll typically pay a non-refundable booking deposit (usually between €500 and €2,000, but can be up to €5,000) to secure the property. This holds the property for you at the agreed price until contracts are signed. This deposit is generally refundable until contracts are signed. If you have any doubts about the selling agent, check the Register of Licensed Property Service Providers  here: www.psr.ie/psra-registers/register-of-licensed-property-services-providers/ 

Go "Sale Agreed":
Once the booking deposit is paid, the property is considered "sale agreed."

Legal and Mortgage Process
Appoint a Solicitor:
This is crucial. Murphy McElligott, Solicitors  have vast experience in acting for clients purchasing a New Build home.  Phone us or email us for a competitive and comprehensive quote. It is important to know from the outset what legal and registration charges you will be facing.  

Loan Approval (Full Offer):
You will need to advise your lender on the property you have agreed to purchase. Your lender will arrange for an approved valuer to carry out a valuation of the property. This ensures the property's value aligns with the mortgage amount. This valuation report must not be more than four months old at the time of mortgage drawdown. Once the valuation has been carried out a formal loan offer will (not just AIP) will issue to your and your solicitor.

Planning Enquiries:
Murphy McElligott Solicitors can carry out planning searches which will reveal everything on the planning file of the local authority. However, you may wish to check the development plan for the area and adjacent areas as future plans and initiatives by local authorities may influence your decision to purchase. 

Contracts for Sale:
The builder's solicitor will send the contracts to your solicitor. New build conveyancing often has tight deadlines, typically 28 days from reservation to exchange of contracts. Typically, there will be two contracts: A building agreement whereby you employ the developer to build and a Site agreement whereby you will be granted the land on which you new home will be built. 

Pay the Balance of the Deposit:
You will usually need to pay the remaining balance of your 10% deposit when you sign contracts (the booking deposit will be part of this). So, if your initial booking deposit was €5,000 and the 10% deposit is €30,000, you'll pay another €25,000 at this stage. Do bear in mind that many solicitors for developers will accept your Help to Buy Scheme money towards the contract deposit. 


Sign Contracts:
Once you and your solicitor are satisfied with the contracts and all checks (including planning,  searches) are complete, you will sign the contracts. Once the contracts are signed by all parties and exchanged and the deposit paid, you will become legally bound to complete the purchase.

Your lender will arrange for an approved valuer to carry out a valuation of the property. This ensures the property's value aligns with the mortgage amount. This valuation report must not be more than four months old at the time of mortgage drawdown.

Life Assurance and Home Insurance:
You must have these policies in place before your mortgage can be drawn down.

Construction and Completion

Estimated Completion Date:
The developer will provide an estimated completion date. Be aware that delays due to material shortages or weather can occur.

Snag List:
This is a vital step. Try and arrange in advance for a professional snagging inspector to conduct a "snag list survey." This identifies any defects, from minor cosmetic issues (scratched windows, paint splatters) to more serious underlying problems. It's highly advisable to use a professional, as they can identify issues you might miss. Once you or your solicitor receive a notice that the property is complete and ready for snagging, you have typically 7 to 14 days for your professional surveyor to do a snag list survey. The time limit will be set out in the Building Agreement. If you do not do a snag list in the time limit set by the developer, you will be be obliged to close regardless of the defects that might exist. 

Rectification:
The developer is obligated to fix most  identified snags. A good surveyor will spot all defects so you will not have to rely on the contractual obligation of the developer to fix defect subequent to completion. 

Final Valuation:
Your bank will likely require a second valuation once the house is complete which is one of the requirements before they will issue the loan funds.

Closing the Sale

Draw Down Your Mortgage:
Your mortgage funds will be drawn down, sometimes in stages for self-builds, but for new builds, the main portion is drawn down when the property is complete. Your solicitor will handle the transfer of funds.

Payment of Remaining Funds:
Ensure all remaining funds for the purchase (including stamp duty and solicitor's fees) are with your solicitor. Closing funds can take a full working day to transfer, so aim to arrange this 3-5 days before the scheduled closing.

Registration Fees:
Your solicitor will also arrange for the property to be registered in your name with the Land Registry (this incurs a fee). Do bear in mind that there are considerable delays in the Land Registry so registration can take many months. 

Collection of Keys:
Once payment has been exchanged and all legal formalities are complete, you can collect your keys from the developer's site office. You'll also be provided with details regarding utility readings.

Post-Completion

New Build Warranty:
Most new build properties in Ireland come with a 10-year structural warranty (sometimes called latent defects insurance) from providers like HomeBond or Build-Zone. This covers structural defects that may arise after completion. Familiarize yourself with what it covers.

Utilities:
Contact utility providers (electricity, gas, broadband, etc.) to set up accounts in your name within 10 days of moving in.

Key things to remember for a first-time buyer purchasing a new build:

• Timelines are tight: Developers often require quick turnaround times for contract exchange (e.g., 28 days from reservation).
• Solicitor is key: You can rely on the expertise Murphy McElligott Solicitors to guide you through the entire process
• Snagging is essential: Don't skip a professional snagging survey.
• Government schemes can significantly help: Research and apply for the Help to Buy and First Home Scheme if you're eligible.
• Budget for all costs: Beyond the deposit, there are significant legal, tax, and insurance costs.

​This comprehensive guide should help you navigate the exciting process of buying your first new home from a developer whether the new housing development is in Dún Laoghaire, Greater Dublin or even further afield. 
Good luck!