Buying a new build property?
There are always a lot of comments flying around about new build houses, but whether you love them or hate them, there are some important points you ought to be aware of when it comes to buying your own. Writes Chloe Parker, Legal Assistant at Wollens.
Unlike a standard residential transaction, it is important to remember that you are buying from a developer and not a member of the public. This means that there are likely to be timeframes regarding exchange of contract set out by the developer from the day you pay your reservation.
It may seem crazy talking about exchange of contracts so early on, especially when you are asked to put on the hi-vis jacket, hard hat and boots and are shown a shell of a house in the middle of a building site.
This is another important point to note. You are buying a house which is not yet fully build complete.
Many developers like to aim for exchange of contracts with completion on notice within 28 days of the reservation. But what does ‘on notice’ actually mean?
Exchanging with completion on notice refers to the time between when contracts are exchanged (making the contractual agreement legally binding) and when you get the keys to move into your new home.
Before exchange takes place, the developer will provide an anticipated completion date. This is the date they anticipate the build to be complete. However, this is only ever anticipated, it is never guaranteed. To allow themselves some breathing space, the developer will also agree a Longstop Date. This is just a fancy way of saying deadline and will differ depending on which stage the build is at, at the time the exchange takes place.
If the property is weathertight upon exchange (roof on, doors and windows in) they give themselves 2 months leeway. However, If the property is not weathertight, they give themselves 6 months leeway.
So, for example, they may say to you “the anticipated date is 1st June and the Longstop date is 1st December”. In this example, you would need to bear in mind that you would be legally tied in to purchase the property until 1st December.
If you are a first time buyer, this is not so much of an issue. However, if you are selling your current property and buying a new build, you become part of a chain of transactions and this can add another level of pressure.
If you are in a chain situation, it may be worth considering temporary accommodation. This might sound a little drastic, but in reality, it means moving into rented accommodation for a few months. You may never need to consider this option. However, it is uncommon for a chain of transactions to ‘hold on’ for the full length of the longstop date.
When the property is ‘signed off’ and issued with a building control completion certificate and the 10 year warranty, this triggers the notice to complete.
Let’s go back to our example, you exchanged 6 months ago, and you’ve been eagerly awaiting this moment, but what happens now?
Your conveyancer will let you know that they have received notice to complete meaning you have 10 working days from the day the notice is served to complete the transaction and move into your new home. Once the completion date is agreed, all you need to do is get packing those boxes!
How we can help
For further information, please contact our new build conveyancing team.