Buying a New Build Property
The following deals with information you may need to consider when buying a New Build property.
Exchange of Contracts
When you first reserve a New Build property you will usually be given a deadline for exchanging contracts. This is quite normal for a New Build property and if you have an existing property to sell as long as the developer can see progress being made and they are kept up to date there are not usually any issues with the developer.
Fixed -v- Anticipated Completion Dates
When buying an existing property you would usually exchange contracts with a fixed completion date. The completion date becomes part of the contractual terms.
With a New Build it is sometimes difficult to provide a fixed completion date as the property will be part way through the building period. For this reason when purchasing a New Build you will often be required to exchange contracts with an anticipated completion date which will be “On Notice”, this means that when the developer sends written notice, usually 7 to 10 days, then the legal completion of the purchase must then take place on the date given in the notice.
A developer will always reserve the right to run over an anticipated completion date and it is only the best estimate of when completion might take place. If the construction of your home is substantially delayed, you may be able to cancel the contract and have your deposit refunded however all developers work with slightly different contract provisions and full details will be provided to you in relation to your specific transaction.
It is sometimes difficult to coordinate the purchase of your New Build home with the sale of your existing property. The reason for this is that the buyer of your existinghome may be given a fixed completion date, under these circumstance communication between the buyer of your property and the developer is most important. Communication is important in this situation and it is our job as your solicitors to ensure that the contracts are exchange in a way that you can vacate your exiting property on the day you purchase your New Build property. There are occasions when this is difficult to achievehowever specific advice can be given relating to each specific transaction.
Sometimes a developer will provide a financial or non-financial incentive or inducement to purchase a New Build property, common incentives are contribuitons towards legalcosts or Stamp Duty Land Tax or otherwise contribution towards to costs of internal fittings such as carpets and better specfiication fittings such as kitchen units and tiles. When purchasing a New Build with the assistance of a mortgage it is important that all incentives are disclosed to your mortgage lender and it is important to inform your mortgage broker at an early stage in your application to the lender about any incentives that have been agreed with the developer.
Nearly all New Build homes come with a ten year warranty. The most common warranty provider is NHBC however there are other similar warranty providers such as LABC and Checkmate which cover the property for the first ten years for structural defects to the property, these warranty providers also sometimes deal with the building regulation requirements to the property.
Snagging is a process whereby you can highlight any minor cosmetic defects or other minor defects to your developer once you have moved into the property. Minor defects are defects which will not prevent you from completing your purchase however the contract provisions will usually provide for a short period after you have moved into the property to raise snagging defects with the developer who in turn has a certain amount of time to repair these minor defects to the property.
Energy Performance Certificate – An Energy Performance Certificate, like with any other property, will be provided on a New Build property however this will be provided towards the end of the transaction when the property is completed.
Engrossment Fee – this is a fee payable to the developer’s solicitors for producing the final version of the Transfer Deed or the Lease if the property is a leasehold. This is a charge that doesn’t usually arise when purchasing an existing property, it usually only applies to a New Build property.
Help to Buy – these are a range of government schemes designed to assist homebuyers including the Equity Loan Scheme and Help to Buy ISA.
Longstop Date – This is the date in the purchaser’s contract after which either or both parties can cancel the contract. This usually occurs when there has been a considerable delay in the building of the property and can be anything from six to twelve months after the anticipated completion date.
New Build Warranty – this is the guarantee on your new home.