Does the Conveyancing Process Differ When Buying a New Build?
The conveyancing process when buying a new build is different to the process of buying an older property. That’s why if you’re buying a new build, you must instruct a solicitor with experience in new build purchases.
The conveyancing process for new builds
The conveyancing process for new builds is as follow:
1. Pay a reservation fee
This secures the purchase for a specified period, usually 28 days, by which time the contract must have been exchanged. The fee is non-refundable, but is typically deducted from the final purchase price upon completion. You lose the reservation fee if you pull out of the purchase or fail to exchange contracts within specified period. The fee is decided by the developer and can be anything between £500 and £2,000 or more.
2. Conveyancing checks
You have a very short amount of time to exchange contracts, which as mentioned above is normally 28 days. This deadline is set by the developer and works to their advantage, as it forces the buyer to move quickly. You must instruct a conveyancing solicitor as soon as your reservation fee is paid. Your solicitor can then:
- Check the contract
- Complete local authority searches
- Check for restrictive covenants
- Check the building complies with planning regulations
- Find out what is included in the sale
- Check the property is connected to gas, water, drainage and electricity
- Advise you about the long-stop completion date, which is the date you can get your deposit back if the sale has not been completed
- Advise you about a snagging provision, which is written into the contract and forces the developer to rectify any issues identified with the property after completion
Your solicitor will raise any issues that are uncovered. It may be necessary to get clarification from the developer, or enter into negotiations if the contract contains/omits clauses that are unfavourable to you as the buyer.
3. Exchange contracts
If you want to continue with the purchase after the checks have been completed, you must pay the deposit and exchange contracts by the deadline. The deposit is normally 10% of the purchase price, but may differ if you are buying through a government scheme. You will also have to sign a contract. You are committed to the purchase at this stage, unless the transaction is not finalised by the long-stop completion date.
You must then wait for the building work to finish and the property to be signed off by building control and the National House Building Council (NHBC) or similar warranty provider.
Once the property has been signed off, the developer will serve you with a Notice to Complete. You then have a very short amount of time to transfer the outstanding balance to the seller’s solicitor. The time frame is usually 10 days. You should inspect the property first and prepare a snagging list for the developer. You will receive a 10-year NHBC warranty after you move in (or similar warranty from another provider).
How does this differ to buying an existing property?
The process of buying a new build is different to that of buying an existing property.
For one thing, you may be asked to pay a reservation fee when buying a new build. This is not common practice when buying property from homeowners, but is often requested by developers.
No structural survey
Lots of people buy new builds off-plan, where drawings and artist’s impressions depict the final product. If so, you won’t need to complete any structural surveys before the exchange of contracts because the building is still being built. But you may want to get a snagging survey done before the completion date.
All comes down to the paperwork
The fact that the property doesn’t yet exist complicates matters as it all comes down to the paperwork. Your solicitor will need to check the paperwork very carefully to see what is included in the contract, warranties, planning permission and lease (if it’s a leasehold). This information alone will dictate whether you want to commit to the purchase.
At the mercy of the developer
You are at the mercy of the developer when buying a new build. You may be given an anticipated completion date, but the developers are not legally bound to comply with this deadline. This can create issues with regard to your mortgage offer, which may only be valid for six months. If the transaction is not completed by the time of the offer expires, you will have to get it extended or start again.
Meanwhile, the developers themselves may not stick to their original promises. Issues can arise, such as:
- Failing to comply with planning regulations
- Failing to comply with NHBC inspections/standards
- Delays beyond anyone’s control
- Failing to build according to the original plans
Your solicitor needs to be aware of these potential risks and request that the necessary safeguards are put in place to protect you. This can include things such as a long-stop completion date and a snagging provision.
Another major difference is the timescales involved. The developer often requires you to act very quickly to exchange contracts, and then again when it’s time to complete. However, you are not given a completion date when you exchange as you would be when buying an older property. All this can be very stressful, and you may feel forced or rushed into the transaction. A solicitor with experience in new build purchases will know how to manage this pressure. They can carry out the necessary conveyancing work in an efficient manner, while at the same time ensuring your best interests are protected.
Looking for a new build solicitor?
We deal with a lot of new build conveyancing transactions. If you’re buying a new build and you’re looking for an experienced solicitor, please contact us for a quote. We are based in Sunderland but act for clients across England and Wales.
Call our Sunderland solicitors on 0191 567 7244 and we’ll be happy to help you. If you would rather contact us online, email us at firstname.lastname@example.org and one of our team will be in contact with you shortly.