The process for buying a new build home can be more complex than purchasing property in the second hand market. This is because while it is brand new, it has never been lived in before and problems could be waiting for you once you move in.

Structural or operational problems may not be apparent until the building is used, and developers may not have completed important documents or procedures. For example, non compliance with planning regulations, incomplete agreements for roads and sewers, or failure to arrange NHBC inspections. Problems can also arise from buying ‘off-plan’, before construction is completed.

You’ll need an experienced new build conveyancing solicitor to make sure there’s no stone unturned and no nasty surprises waiting for you once the keys are handed over.

It can be a confusing process, but here’s everything you need to know about new build property law…

Buying New Build Property Off-Plan…

If you’re buying your new home off plan, ie construction is underway or yet to begin, delays can cost you dearly.

Most developers will insist that mortgage finance is secured before contracts are exchanged. However, most mortgage approvals expire after six months, so if your new home is not ready within that time you could find yourself having to reapply for a mortgage. Developers may also push you to exchange before construction is complete. This leaves buyers in a vulnerable position, tied in to a contract with no guarantee of when your new home will be ready.

It is recommended that you negotiate a ‘long stop’ completion date with your developers, giving you extra time to complete. If the property is not ready by this long stop date, buyers can walk away without penalty.

New Build Mortgages And Deadlines…

Always ensure that your mortgage is agreed in principle before paying a reservation fee.

Once you’ve agreed a sale or an offer is made, developers will want you to put down a reservation fee that could be hundreds or thousands of pounds. This reserves your new build for a set time, usually around  28 days. The reservation fee is deducted from the purchase price. However if you don’t exchange contracts within that time you will lose your reservation fee, so make sure you have everything in order ready to go before reserving.

You will be asked to pay a hefty deposit on exchange of contracts.However, there can also be issues around the agreed sale price. Mortgage valuations are usually carried out at the beginning of construction and after construction is completed. If property prices change in that time and you are unable to secure a mortgage for the new price, you could lose any deposit you’ve put down. Ask for the price to be locked at exchange and discuss what happens if prices vary before completion.


Snagging In New Build Property…

Sometimes when you buy something new, you don’t notice little quirks or problems until you start using it. It’s the same for new build homes. Doors catching on carpets, scratches on windows or surfaces, splashes of paint, leaky taps – annoying defects in your otherwise brand new home.

Negotiate a snagging provision in your contract with your developer to deal with little problems that arise with your new build home. Carry out a snagging survey before exchanging contracts. It’s worth getting a professional to do this as they may spot things that an average home owner would not. If you leave a snagging survey until after you move in, your builder could argue that the problem has arisen from wear and tear.

Most new builds are covered by a 10 year NHBC guarantee for structural problems and in the first two years, minor defects excluding wear and tear. Check what other guarantees or warranties are included. Check out NHBC’s page for more info.

Check The Freehold/Leasehold…

Always avoid buying leasehold property. This means you own the property on ‘lease’ from the freeholder. You would likely be liable to pay ground rent of hundred of pounds a year or other charges, and be restricted in what alterations you can make to your home.

Freehold is always preferable. It means that you own the building and the land it stands on outright.

Flats in particular are often leasehold, so check the length of the lease and the price of the ground rent. However, recent years have seen developers selling on the freehold of new build houses to bump up their profits, leaving new build homeowners as leaseholders paying ground rent to the freeholders. The Government has been making moves to crack down on this practise, but if you are buying a new build home you must check the lease/freehold.

A good source of information is The Homeowners Association, which you can visit here.

Talk To Us About New Build Property Law…

Buying or selling a home is never easy and with new build properties, the process is even more complex. If you need to talk to a specialist about new build property law and conveyancing, just give our friendly team a call.