Buying a new build home: how it differs from a standard purchase

Key points to understand before reserving a plot or exchanging contracts.

Quick summary
New build purchases can move quickly at the reservation stage but slowly at the construction stage. That combination can catch buyers out. The legal work needs to be front-loaded, because developers often expect exchange before the property is physically finished.

The developer’s timetable

A developer will usually require exchange within a set period from reservation. That deadline may feel tight, particularly if the property is still a building site. It is important to instruct your conveyancer immediately, provide ID and funding evidence promptly, and keep your mortgage broker updated.

Exchange before the home is finished

Unlike many second-hand purchases, you may be asked to exchange before the property is structurally complete. Once contracts are exchanged, you are legally committed even though the final completion date may not yet be fixed.

Completion on notice and the longstop date

New build contracts often provide for completion “on notice”. This means the developer serves notice when the property is ready, and completion must take place within the period stated in the contract. A longstop date is the backstop date by which the developer must complete, failing which rights may arise under the contract. The longstop should be checked carefully because it affects how long you may be tied in.

Mortgage offer and chain risk

If you are selling another property, a new build purchase can put pressure on the chain. Buyers need to consider mortgage offer expiry dates, removal plans, school or work deadlines, temporary accommodation and the risk of the developer’s timetable moving.

Estate charges, roads and services

Many new estates include management companies, estate rentcharges, service charges, private roads, open spaces, sustainable drainage systems or unadopted areas. These arrangements can affect cost, future saleability and lender requirements. They should be understood before exchange.

Warranty, building control and snagging

Most lenders will expect an acceptable new home warranty or equivalent cover. Buyers should understand the difference between the initial builder warranty period and later structural cover. A warranty is not a substitute for checking the contract, the title or the practical finish of the property. Snagging items should be reported clearly and promptly.

Before you reserve

• Ask what the exchange deadline is.
• Check whether incentives are being offered and tell your lender and conveyancer.
• Confirm whether roads, sewers and open spaces will be adopted or privately managed.
• Ask when the anticipated completion date and longstop date are expected to be.
• Budget for service charges, management fees, moving costs and possible temporary accommodation.

How Wollens can help
We can review the developer’s contract pack, explain the risks in plain English and help you understand what you are committing to before exchange.