Buying a new build home in London is different from buying an existing property, and the mortgage process reflects that. Lenders apply different criteria to new builds, developers offer incentives that can affect your borrowing, and the timelines involved are often longer and less predictable — particularly for off-plan purchases, which are common in London. This guide explains what to expect if you are buying a new build in London and how to navigate the mortgage process. For an overview of our London mortgage services, see our London hub page.
New Build Developments in London
London has one of the most active new-build markets in the UK, with a large number of regeneration and new-build developments across the capital, particularly in areas undergoing significant residential growth. New schemes continue to come forward as part of London’s regeneration programmes.
A high proportion of London new-build stock is flats in multi-storey blocks, often sold off-plan before construction completes. The developer involved, the type of development, and whether the property is a flat or a house all affect the mortgage options available to you. Developments, phases, and availability change, so it is worth checking the current position for your chosen scheme.
Deposits for New Build Properties in London
Some lenders may require larger deposits on certain new-build properties, particularly flats in larger developments. Requirements vary by lender, property type, and development. Given that a high proportion of London new-build stock is flats, the deposit requirement on new-build flats is a significant consideration for many London buyers, and is worth confirming with a broker for the specific development.
The reason for higher deposit requirements is partly to do with valuation risk. Lenders assess new build properties based on their current market value, not the developer’s asking price. If a lender values the property below the asking price, this can affect the loan-to-value calculation and may require a larger deposit, a revised purchase price, or a different route. At London prices, and given the density of some London developments, this is a consideration worth understanding early.
Low-Deposit and Developer Contribution Schemes
Several schemes can reduce the deposit required on a new-build purchase, though availability changes and each should be checked with a broker before relying on it.
Low-deposit new-build schemes. Various low-deposit schemes have existed for new-build purchases, supported by participating housebuilders and lenders and allowing some buyers to purchase eligible new-build homes with a smaller deposit. Availability changes over time, and schemes open and close, so any such scheme should always be checked with a broker before relying on it rather than assumed to be available.
Developer deposit contribution schemes. Some developers offer schemes where they contribute a proportion of the deposit as an incentive — for example, adding a percentage of the purchase price to a buyer’s own deposit. These need to be disclosed to the lender, as they can affect how the mortgage is assessed.
Developer-funded rate reduction schemes. Some developers offer schemes that use a developer contribution to reduce the buyer’s mortgage interest rate for an initial period, lowering early monthly payments. These schemes vary by developer and lender, must be disclosed to the lender, and should be assessed on their total cost rather than the headline monthly saving alone. A broker can explain how a specific scheme would work in practice.
Developer incentive schemes change over time, and the schemes available on a given development depend on the housebuilder and participating lenders. A broker can confirm what is currently available and how it would affect your application.
Mortgage Offer Validity and Build Delays
Mortgage offer validity varies by lender and product. When buying a new build that is still under construction — as many London off-plan purchases are — there is a risk that the build will not complete within the offer window. If your mortgage offer expires before completion, you may need to reapply or extend the offer, which can mean a reassessment of your circumstances and potentially a different rate.
For off-plan purchases, it is important to consider whether the offer period aligns with the anticipated build programme. London has a large off-plan market where build programmes can run for an extended period, so selecting a lender whose offer validity suits the development can be important. A broker can help identify lenders whose criteria may be suited to the development and timeline involved.
Your contract with the developer should include a long-stop date — a backstop deadline by which the build must complete or either party can withdraw. Understanding this date and how it relates to your mortgage offer validity is important, particularly on off-plan London purchases where completion can be a long way out.
Valuations and the New Build Premium
New-build properties can carry a premium over some comparable existing homes. This reflects the warranty, specification, and energy efficiency that come with a new build, but it can also mean the property does not immediately hold its value on the resale market.
Lenders instruct their own valuation on new build purchases, and this valuation may come in below the purchase price. If that happens, you have several options: increase your deposit to cover the shortfall, ask the developer to reduce the price, or look for a lender with a different valuation approach. A broker can help you navigate this.
In London, where some developments are priced at a premium and built at high density, buyers should be aware that asking prices may include a new-build premium compared with some existing homes. Understanding this before you reserve can save you from an unexpected shortfall when the valuation comes in.
Cladding and EWS1 on London New-Build Flats
For new-build flats in buildings of 11 metres or above, lenders will check the building’s external wall system safety status, often evidenced by an EWS1 form. While newly completed buildings should be constructed to current standards, cladding and external wall safety remains an active area of lender scrutiny in London, where high-rise flat developments are common.
Before reserving a new-build flat, it is worth confirming the building’s safety documentation position with the developer, as an unresolved external wall safety question can restrict the pool of lenders willing to lend. A broker familiar with London flat lending can help identify suitable lenders for the specific building. For more on leasehold and cladding considerations, see our London leasehold and cladding guide.
Developer Incentives and How They Affect Your Mortgage
Developers commonly offer incentives to attract buyers. These can include gifted deposits, stamp duty contributions, upgraded fixtures and fittings, part-exchange schemes, and cashback on completion. While these can reduce your upfront costs, they must be disclosed to your lender and can affect how the mortgage is assessed.
Many lenders place limits on the value or type of incentives they will accept. The threshold varies by lender, product, and loan-to-value. If the developer’s incentive package exceeds the lender’s limit, the lender may reduce the property’s assessed value for mortgage purposes, which can affect how much you can borrow.
It is important to discuss any incentives with your broker before committing, so that the mortgage application reflects the full picture.
Snagging, Completion, and Warranties
Before you complete on a new build purchase, you should arrange a snagging inspection — a detailed check of the property for defects or unfinished work. This is separate from the lender’s valuation and is carried out for your benefit. Some buyers instruct a professional snagging company.
New build homes come with a structural warranty, usually provided by the NHBC (Buildmark), LABC, or Premier Guarantee. This often covers ten years, depending on the warranty provider and policy terms. Lenders require a recognised warranty to be in place as a condition of lending.
Completion on a new build often happens on a date set by the developer rather than by mutual agreement. This can create pressure to complete quickly once the property is ready. Having your mortgage in principle and legal work well advanced before the completion notice is issued can help avoid last-minute pressure.
Energy Efficiency and Running Costs
New build homes are built to current building regulations and are generally more energy efficient than older properties. Many new-build homes achieve higher EPC ratings than older stock, although the rating should be checked for the specific property.
Some lenders offer mortgage products for energy-efficient properties. In some cases, these may offer a pricing benefit, depending on the lender and the property’s EPC rating. Much of London’s housing stock is older, so a new-build property may offer a different energy-efficiency profile from many period or converted homes.
Hidden Costs to Budget For
When buying a new build, the purchase price may not include everything you expect. Items such as flooring, turf for the garden, window coverings, and fitted wardrobes are often excluded from the base price or offered as optional extras. These costs can add up and should be factored into your budget alongside the deposit, legal fees, and mortgage costs.
Many London new-build developments — particularly flats — carry service charges and, in some cases, estate or ground rent charges for the upkeep of shared spaces and building management. On larger London developments, service charges can be substantial and are an ongoing cost that should be understood before you commit.
Stamp Duty on New Build Purchases
Stamp duty applies to new build purchases in the same way as existing properties. First-time buyers may qualify for relief on purchases up to £500,000, paying nothing on the first £300,000 and 5% on the portion to £500,000. In London, many new-build purchases exceed these thresholds. Some developers offer to contribute to stamp duty as an incentive, but this must be disclosed to your lender. For worked examples at London price points, see our London stamp duty guide.
The New Build Buying Process
The buying process for a new build typically follows this sequence: get a mortgage in principle, choose your plot, pay a reservation fee (which varies by developer and is typically deducted from your deposit on exchange), instruct a solicitor, submit your full mortgage application, exchange contracts (usually within a set period of reservation, though this varies by developer), and then wait for the build to complete before final completion. The period between reservation and completion varies considerably depending on the stage of construction.
It is important to have your mortgage in principle and solicitor in place before you reserve. Developers often set tight exchange deadlines, and missing them can mean losing your reservation fee or your preferred plot. For more on how much you can borrow, see our London borrowing guide.
Why We Wrote This Guide
Fitch & Fitch is an independent, whole-of-market mortgage broker with offices in Canary Wharf, Cambridge, and Colchester. We are an appointed representative of JLM Mortgage Network, authorised and regulated by the Financial Conduct Authority (FCA Registration Numbers 955014 and 300629). You can verify this on the FCA Register at register.fca.org.uk.
Fitch & Fitch has received recognition from independent industry bodies including the Mortgage Strategy Awards, Mortgage Introducer Awards, and Legal & General Mortgage Club Awards. These awards are judged independently and can be verified on the respective awards websites.
We wrote this guide because we believe an informed buyer makes better decisions. For further information about our London mortgage services, visit our London hub page.
Frequently Asked Questions
Is it harder to get a mortgage on a new build?
Not necessarily harder, but different. Lenders apply specific criteria to new builds, not all lenders offer new build mortgage products, and new-build flats in particular can face stricter deposit and valuation requirements. A broker can identify which lenders are most suitable for your development and circumstances.
Do I need a bigger deposit for a new build in London?
Often, yes — particularly for flats. Some lenders may require larger deposits on certain new-build properties, especially flats in larger developments. Requirements vary by lender, property type, and the specific development. A broker can confirm what applies to the development you are considering.
Can I get a 5% mortgage on a new build?
Some buyers may be able to purchase a new build with a 5% deposit through specific lender criteria or developer schemes. Low-deposit new-build schemes have existed at various times, but availability changes and schemes open and close over time. Buyers should check what low-deposit options are currently available with a broker, as criteria and availability vary by lender and development.
What is a long-stop date?
A long-stop date is a contractual deadline by which the developer must complete the build. If the property is not ready by this date, either party may be able to withdraw from the contract. It is a protection for buyers against indefinite delays, and it is particularly relevant for off-plan London purchases where completion can be a long way out.
What questions should I ask when buying a new build?
Key questions include: what is included in the purchase price and what is extra; what incentives are available and how they affect the mortgage; what is the expected completion date and the long-stop date; what warranty is provided; what are the service charges and any estate or ground rent charges; for flats, what is the building’s external wall safety position; and what happens if the build is delayed beyond the long-stop date.
Do new-build flats in London have cladding issues?
Newly completed buildings should be constructed to current standards, but cladding and external wall safety remains an active area of lender scrutiny for buildings of 11 metres or above. Before reserving a new-build flat, it is worth confirming the building’s safety documentation with the developer, as an unresolved question can affect mortgage availability. For more detail, see our London leasehold mortgage guide.
Are mortgage offers long enough for off-plan London purchases?
Standard mortgage offers may not be long enough for an off-plan purchase where the build runs longer. Mortgage offer validity varies by lender and product, and some lenders offer extended new-build offer periods. For off-plan London purchases, it is important to consider whether the offer period aligns with the anticipated build programme. A broker can help identify lenders whose criteria may be suited to the development and timeline involved.
Next Steps
If you are buying a new build in London, a useful first step can be understanding your budget, deposit position, and the lending considerations associated with the development you are considering. Getting a mortgage in principle before you reserve confirms your budget and shows the developer you are a serious buyer.
For further information about our London mortgage services, visit our London hub page.
Related Guides
How Much Can I Borrow for a Mortgage in London?
How Much Deposit Do You Need to Buy in London?
The information above is for general guidance only and does not take account of your personal circumstances.