Before you dive in and buy a new build property, let’s explore some important pre- purchase due diligence research that will empower your decision-making process and help secure the best property for your situation.
Investing in a new build property presents a myriad of opportunities, with the promise of modern design, up-to-date amenities, and energy efficiency. However, proceeding with a new build purchase necessitates a comprehensive pre-purchase due diligence process to ensure informed decision-making and mitigate potential risks. This article outlines the important steps involved in conducting pre-purchase due diligence for new build property investment.
Understanding the market.
An important aspect of the pre-purchase process is some online research to get a better understanding of the local market. Prospective buyers should familiarise themselves with the region and the market trends as well as understanding the neighbourhood amenities, and future development plans. Population growth and infrastructure plans offer valuable insights into the region's property market dynamics.
Have the right team in your corner.
Before you get too far down the track of looking to purchase a new build property you will need to ensure you have good mortgage adviser and suitably qualified and experienced property lawyer. You want a lawyer that specialises in new build conveyancing. You may also want to engage with an Accountant if you are thinking about owning the property in a Company or Family Trust.
Know your numbers.
A thorough financial assessment helps ensure that your purchase is within your budgetary constraints. Buyers should calculate the total cost of ownership, considering the purchase price, legal fees, loan interest rates, and any additional costs such as insurance and property management fees.
Developer/Builder track record.
Examining the developer's track record is crucial in assessing the reliability and quality of the new build project. You should research the developer's history and review their past projects. Where possible, it is beneficial to visit completed developments by the same builder to evaluate build quality and design standards. Additionally, you should consider any testimonials regarding the developer to ensure their reputation aligns with your expectations.
Ensure you understand the risks.
Navigating the legal aspects of a new build property purchase is a critical component of the pre-purchase due diligence process. Buyers should review the sale and purchase agreement, preferably with the assistance of a qualified property lawyer (if this can be done quickly and for little or no cost). Key considerations include contract terms regarding construction timelines, defect repairs, and deposit requirements. It is also essential to confirm that any agreement for sale and purchase has a comprehensive Due Diligence clause, that is for the sole benefit of the purchaser. This allows you to conditionally secure a property, with the ability to cancel and exit the agreement at any time during the agreed due diligence period, which is usually 10 – 15 working days after the agreement is signed by all parties and dated.
Conclusion.
Engaging in comprehensive pre-purchase due diligence research is imperative when purchasing a new build property. The more preparation a buyer can undertake before you find a property that you actually want to proceed with, the more likely you can move quickly and confidently with your purchasing decision.
If you’re considering a property purchase, it's wise to connect with your mortgage adviser to be certain of your numbers. This will enable you to act quickly when a great opportunity comes up. Additionally, feel free to reach out to our team at Equiti, and we’ll help you find properties that match your investment goals. Financial advisers, don’t hesitate to share this information with your clients to help them make informed decisions about their property investments!