Buying a Newbuild Home
Buying a newly-built property is an exciting prospect; being the first owner with brand new shiny fittings, no worries about imminent decoration or repair costs. But what can you expect from the newbuild conveyancing process and what can you do to help make the process runs more smoothly?
Reserving your New Home – Take Note of the Exchange Deadline
When you reserve your new home you will complete a reservation form on site and pay a reservation deposit (usually £500) to the developer to secure your reservation. The reservation form will set out the deal you agreed with the developer and will record any financial incentives the builder is prepared to give you (e.g. stamp duty paid). The reservation form will specify a deadline by which you will have to exchange contracts and this is usually 28 days from the date you reserve the property. If you do not exchange contracts within the deadline the developer can remarket the plot and you risk losing your reservation deposit. Tollers will work with you to try and meet the exchange deadline as closely as possible. You can expect the developer’s sales team to be regularly reminding you of the deadline!
Related Sale – Chase Your Buyers
If you have a property to sell you cannot exchange contracts with the builder until your buyer is also ready to exchange. Therefore, it is essential you advise your selling agents to notify the buyer that they too must comply with the exchange deadline. We would recommend chasing your selling agent frequently to ensure your buyers are proceeding with all speed.
Mortgage Application – Apply Promptly
A delay in mortgage offers being issued frequently cause delays in newbuild transactions. If you are mortgaging the property make sure your mortgage broker is aware of the exchange deadline, and ensure you make your formal mortgage application as early as possible. Your lender will need to carry out a valuation of the property before they can issue a mortgage offer and you will therefore need to ensure that you have paid your valuation fee to your lender or broker as soon as possible to avoid delays later on.
Gifted Deposit – Tell Us Early
As your solicitor we will have to obtain your lender’s approval to all incentives and gifts, in writing before we can exchange. Therefore, if you are receiving either; a financial incentive from the developer (e.g. stamp duty paid) or a financial gift from your parents to assist you to buy the property please notify us from the outset to avoid delays later on. If you are receiving a gift from your parents we will need to ask them to complete a gift declaration, provide ID and provide copy bank statements.
Initial Search Advance – Pay Promptly
Searches form an important part of the legal title and can take a few weeks to come back so please ensure that you pay your search advance (£300) to us as soon as possible. A newbuild property presents challenges in terms of the volume of legal paperwork compared to a second-hand property; do not therefore be surprised if we send you more documents than you might have received on a previous second hand property purchase. When we are satisfied with the legal title to the property and have received the results of your searches and your mortgage offer (if applicable) we will write to you with the contract, transfer, mortgage deed (if applicable) and stamp duty land tax form for your signature. To assist us in complying with the developer’s exchange deadline please ensure you return all papers sent to you as soon as possible. When we receive your signed documents and deposit monies (if applicable) we can then exchange contracts, hopefully within the developer’s deadline!
Snagging and Completion Dates
Developer’s contracts usually provide for a flexible completion date. This means that when you exchange contracts you will not know when completion will take place. Although the contract between you and the developer would usually contain an ‘estimated completion date’ this date is very much a guide. You will not usually be entitled to withdraw from the transaction due to build-delays unless the delay has been a full six months after the developer’s estimated completion date’. After exchange, when the property is nearly ready you will be invited by the developer to carry out your ‘snagging inspection’ on site. This is your opportunity to go around the property with a fine-tooth comb and identify any issues which you would like the builder to put right, e.g. perhaps the wrong taps have been fitted or a floor tile is cracked. Minor issues such as these will not be allowed to hold up completion. When the property has passed a final inspection carried out by the newbuild warranty inspector (usually the NHBC) the developers’ solicitors will serve a formal ‘notice to complete’ upon us giving us (usually) ten working days’ notice of completion (the moving date). Once notice to complete has been served and a final completion date is known we will carry out our pre-completion land registry searches on your behalf and provide you with a statement showing any balance monies needed from you. You will need to arrange to transfer any balance monies to us as cleared funds at least three working days before completion. We will make arrangements to draw down your mortgage monies (if applicable) the day before the legal completion date to avoid any hold ups on the moving day. The property becomes your responsibility on the day of completion and you will need to provide us with evidence that you have a suitable policy set up with a start-date of the completion date.
On the day of completion, we will send the balance monies by telegraphic transfer to the developer’s solicitors and once they confirm receipt of the monies the property is yours. We will telephone you when completion has taken place and at that point you will be free to go to the developer’s sales office to collect your keys and begin your life in your new home.
If you require further advice regarding purchasing a newbuild property Talk to Tollers on 01604 258793.