What is the difference between a new-build and a second-hand purchase?
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Short answer
A second-hand purchase is one contract for a finished house, with a survey to protect you and stamp duty on the full price. A new-build purchase is two contracts (one for the site, one to build the house), a snag list instead of a survey, a structural guarantee such as HomeBond, stamp duty on the VAT-exclusive price, and a closing date set by the developer's completion notice. The solicitor's fixed fee is the same for both.
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Stamp duty
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A government tax, payable separately to solicitors' fees and paid through your solicitor on completion. The figure shown is the residential rate on the basis chosen.
Side by side
| New build | Second-hand | |
|---|---|---|
| Contracts | A contract for sale (the site) and a building agreement (the house) | One contract for sale |
| What exists at signing | A site and a specification | A finished house |
| Condition | Snag list; the builder remedies | Survey; you renegotiate or walk away |
| Structural cover | A guarantee such as HomeBond | None beyond your survey |
| What stamp duty is charged on | The price with the VAT taken out: divided by 1.135 for a house, by 1.09 for a qualifying apartment | The full purchase price |
| VAT in the price | 13.5% on houses, 9% on qualifying apartments | None |
| Closing date | Set by the developer’s completion notice | Agreed between the parties |
| Schemes | Help to Buy, First Home Scheme | Neither, except a tenant purchase under FHS |
The two contracts on a new build
The contract for sale covers the site: title, boundaries, rights of way and services. The building agreement covers the house: the builder’s commitment to build it to the agreed drawings and specification. Because you are buying something not yet finished, the solicitor’s job runs through construction to the completion notice.
The completion notice
When the house is finished, the developer serves a completion notice. That starts a deadline, set by your building agreement rather than by statute, and it is short: weeks, not months. Missing it usually means interest running on the balance, so the mortgage funds, insurance, Help to Buy code and snag list all need to be ready before the notice arrives.
Snag list versus survey
A second-hand home is bought as seen: the seller is not obliged to make it free from defects, so a survey before you commit is how you protect yourself. A new build is inspected against the specification instead, and the builder undertakes to fix the snags. Most new homes also carry structural cover such as HomeBond, which covers major structural defects for ten years and protects you if the builder goes out of business before completion; many lenders require it.
Stamp duty
The advertised price of a new build includes VAT, and stamp duty is charged on the VAT-exclusive amount: a €400,000 new house carries €3,524.23 in duty, a qualifying new apartment €3,669.72, and a €400,000 second-hand home €4,000.
Timing
A second-hand purchase usually completes about four weeks after contracts are signed. A new build completes when the completion notice says so, which may be months after signing if the house is not yet built.
Frequently asked questions
Do the solicitor's fees differ?
The fixed fee table is the same: €3,000 up to €400,000, €3,100 up to €1,000,000 and €4,200 above. On a new build an additional fee of €75 may apply, and half of the professional fee is paid on signing with the balance near completion, rather than everything at the end.
Can I refuse to close a new build because of snags?
Usually not. Snags are normally items the builder undertakes to remedy, not grounds to delay completion, so the snag inspection is booked early while your leverage is greatest.
Which schemes apply to which?
Help to Buy and the First Home Scheme apply to new builds and self-builds, not to second-hand homes. A second-hand home can qualify for the First Home Scheme only as a tenant purchase of the home you already rent.