As the government continues to support the building of new homes, there’s a decent chance that the property you’re interested in buying is going to be a new build. As you often have to commit to your purchase before the building work is completed, the conveyancing process is different compared to buying an older home.
If you buy a property before construction has started or while your new house is being built, then you’re effectively going off what you’ve seen in the show home or a computer-generated set of drawings. After deciding to go ahead and buy, you’ll likely have to put down a reservation fee of between £500 and £2000. This usually isn’t returnable but will come off your purchase price when you reach completion.
Once you’ve reserved the property, you’ll typically have four weeks to exchange contracts. If you don’t manage to do this, then the builder can pull out of your deal, meaning you lose both your reservation fee and the house. If the development you’re buying into is very popular, builders can be particularly ruthless when it comes to hitting timescales.
For this reason, as soon as you have an offer accepted on a new build home, you need to immediately instruct a conveyancer and get your mortgage in place. Deadlines can sometimes be extended, but you may find that there’s a financial incentive for meeting agreed timescales.
Having to wait for construction work to be completed can cause issues, especially when there are delays outside anyone’s control, for example extreme weather conditions or shortages of building materials. If the property isn’t likely to be build-complete for a couple of months, your mortgage offer will have expired before it’s time to move forward. It will be up to you and/or your financial adviser to keep in touch with your lender and either arrange for an extension to the product you have chosen, or switch to an alternative.
Your conveyancer will have to thoroughly check the title documentation, planning permissions, building control and any warranty of your new house for you. This is often a lot more complicated compared to normal transactions. As your legal representative will need clarification in order to draft your contracts, you must be in a position to answer any queries as quickly as possible.
Once everything’s been ironed out, including details such as local searches, you can work towards exchanging contracts. To provide additional peace of mind, you should receive a ten-year guarantee from the builder which is usually provided by the National House Building Council (NHBC), Buildzone, Premier Guarantee or another specialist warranty provider. You should ensure that you know exactly what is and isn’t covered and for how long before you agree to exchange contracts.
As there are plenty of differences when it comes to buying a new build home, it’s really important that you choose a conveyancer who’s experienced in working on new build purchases. They’ll be comfortable with the differences, and capable of working towards the tight timescales that you’re set, helping your purchase to run as smoothly as possible.
If you are purchasing your first home, take a look at our first time buyers guide for even more handy information on what steps you can expect to take throughout the journey.