Guide to buying new build homes

Buying a property is an exciting time and buying a new build property can be even more exciting as you are buying a blank canvas, with all new fittings – which you may be able to customise. However, buying a new build property is more complex than buying an existing property, with a lot more that needs to be considered. Here our conveyancing expert Marie Rodgers, sets out what you need to know.

What is a new build home?

A ‘new build’ is defined most usually as a property that was built, converted or refurbished within the last two years. People most commonly think of new build as totally new houses – those which are being bought ‘off-plan’. An ‘off-plan’ property is one that is yet to be built; it may be part-way through construction or not yet begun. The sale details for an off-plan property will comprise floorplans, working drawings and computer-generated images instead of photos, to see what the finished product will look like.  However, ‘new build’ also includes properties that have been occupied or rented before, but are still owned by the builder or developer.

Reservation fee for new builds

When you agree to purchase a new build, the developer will ‘reserve’ this plot for you in return for paying a ‘reservation fee’. The amount of this fee can vary depending upon the property and development but usually varies between £500-£2,000. This forms part of the agreed purchase price and is deducted from the balance which you pay for the property on completion. It’s important that you check your reservation agreement carefully in order to work out whether this reservation fee is refundable in the event you do not proceed with the purchase of your plot.

Exchange deadline

A key difference with new builds is that the developer will impose a deadline by which an exchange of contracts must take place. This is usually 28 days. This means that the process will move at a very fast pace and it’s therefore important that you instruct a conveyancer quickly. Also make sure you act quickly upon their instructions as to what they require to progress your purchase. In the event the exchange deadline is not met, the developer reserves the right to re-market the plot, so you could lose the property.

Extras might incur more Stamp Duty Land Tax (SDLT)

One of the benefits of buying a new build property is that you have the ability to customise the property by paying for ‘extras’. Examples of the types of extras you might be able to choose from are upgraded kitchen appliances such as cooker hob, integrated fridge freezer and dishwasher, better kitchen units, better quality floor tiles, bespoke fitted wardrobes and even things for the garden such as turfing and an outside tap.

However, these additional extras may incur SDLT in their own right so it’s best to check this point with an expert. At Tees, we can refer you to a stamp duty specialist who can accurately calculate the correct SDLT you should be paying for your property.

Know exactly what you’re buying in your new build home

The marketing people will show you lots of printed materials and maybe videos to encourage you to buy but these may not show exactly what you will be buying. Your plot could be in a different location on the development site, closer to roads, recreation grounds, with different lights etc. Another thing to be certain of is the precise spec for your new home. You need to know what fixtures and fittings there will be and what building materials will be used throughout the property. Make sure you know what has and hasn’t been included in the total cost so you don’t have a problem later on.

Complex documentation

New build conveyancing is much more complex than that for an existing property. Your conveyancer will be processing a vast amount of additional documentation which comes with purchasing a new build home. They will need to ensure that the necessary planning and building regulation approvals are in place for the development and appropriate provisions are in place for the construction of the roads and sewers on the estate. They will also need to ensure that you have the necessary rights to use these roads and sewers. It’s therefore important that you instruct a conveyancer with knowledge and experience in new build conveyancing who will be able to guide you through the process and identify any issues should they arise.

Mortgage offers on new build homes

Due to the short timescales in which you have to exchange contracts, it’s important that you obtain a mortgage offer as soon as possible. You will need to make sure you have a valid mortgage offer in place before an exchange of contracts. Your conveyancer will also need to ensure that any conditions contained within this offer have been complied with and that the lender is happy to proceed.

If your property is not yet built when you exchange contracts, it’s possible that your mortgage offer may expire before you get to move into your new home. In this instance, you should speak to your mortgage broker or lender directly, in order to ensure that your offer can be extended, or a new offer obtained, should it be required.   You should bear in mind that if a mortgage extension or new mortgage offer is required prior to completion, any new product or interest rate attached to the mortgage, may not be as good as the original mortgage offer issued.     

Dates for completion

When you exchange contracts on a new build property, if the build is not complete, then a ‘fixed’ date cannot be agreed for completion. Instead, the developer will provide you with an ‘estimated’ date for completion. This is the developer’s best estimate for when the property will be completed based upon their forecasts. Unfortunately, factors may delay the build which are outside of the developers’ control. At Tees, we will always ensure that there is a ‘termination’ (often referred to as a ‘longstop’) date in the contract. This is the final date by which the developer has to complete the build of your property, failing which, you can terminate the contract and have your deposit and reservation fee returned to you.

Annual maintenance charge

A new property often forms part of a larger development and will involve the use of shared common areas, such as green spaces or play areas, shared accesses, or private roads. The costs for any upkeep and maintenance for these areas will be payable by the individual property owners by way of an annual maintenance charge. The amount of this charge will vary depending on the development. You should discuss this directly with the site office at the development before reserving your plot so that you are fully aware of the ongoing maintenance charges for which you will be liable.

Structural warranty

Your property will be sold with the benefit of a 10-year structural warranty. Your conveyancer will ensure your warranty is in place upon completion and provide you with a copy of the necessary documentation which you will need in the event you ever need to make a claim in future or sell the property. They will also check with your lender in order to ensure that they are happy with the warranty which is being provided.

Do I need a snagging list for my new build home?

It’s common to find defects that require rectifying. They could be relatively small issues such as poor quality paintwork or a hinge that is broken or more major issues such as a leaking pipe. The developer should check everything, but nothing is foolproof so you need to create a list of what needs doing – a snagging list. Make time to walk through the whole house systematically to check for marks, scratches, and things which are broken.  You can check floors and surfaces are level and whether everything works properly.  Make sure there are no leaks from any taps.

You are not able to delay moving into your property for any snagging works which may be required. At Tees, we advise that you inspect your property before moving in, once it is completed, in order to check the finish and ensure that no major works remain outstanding.

However, it may not be possible to do it before you complete if the housebuilder won’t give you access. If you do it after you move in, don’t wait too long, in case the housebuilder tries to say you caused the damage yourself. However, you do have two years from your completion date to report any defects to your housebuilder which they have to rectify as part of your property’s warranty. At Tees, we will ensure you are aware of your rights to get snags fixed and ensure there is an obligation on the developer to carry out these works. If a dispute arises, we have expert property litigation solicitors at Tees.

At Tees, our conveyancing experts have a wealth of knowledge and experience in the world of new build conveyancing and so are best placed to guide you through every step of the way, from initial instruction to completion. 

 Tees are here to help

We have many specialist lawyers who are based in:

EssexBrentwoodChelmsford, and Saffron Walden
HertfordshireBishop's Stortford and Royston

But we can help you wherever you are in England and Wales.

Chat to the Author, Marie Rodgers

Associate, Residential Property, Bishop's Stortford office

Meet Marie
Marie Rodgers, conveyancing solicitors in Bishop's Stortford | Tees Law

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